Tech Law Journal Daily E-Mail Alert
July 27, 2001, 9:00 AM ET, Alert No. 236.
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House Holds Hearing on Privacy
7/26. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled "How Do Businesses Use Customer Information: Is the Customer's Privacy Protected?" This was the sixth and last in a series of hearings held by the Subcommittee. Rep. Cliff Stearns (R-FL), Chairman of the Subcommittee, stated that "there are substantial benefits that accrue to our economy from the unencumbered flow of information, particularly consumer information." See, opening statement.
Paul Misener of said in his prepared testimony that "there is no inherent need for legislation. We firmly oppose the adoption of any non-federal privacy law that addresses online activities. Nonetheless, could support limited federal legislation, but only if it preempts state laws, only if it bars private rights of action, and only if it applies to offline as well as online activities."
Harriet Pearson of IBM said in her prepared testimony that "any U.S. privacy regime should be a national solution, not a patchwork of fifty conflicting regimes. The regime should encourage transparency and choice. It should hold government and non-profit organizations accountable to similar standards asked of industry. It should neither discriminate against the Internet nor create new private rights of action."
See, prepared statements of witnesses: Harriet Pearson (IBM), Jacqueline Hourigan (General Motors), Zeke Swift (Proctor & Gamble), Paul Misener (, David Johnson, (Landís End), Jennifer Barrett (Acxiom), Deborah Zuccarini (Experian), and John Ford (Equifax).
Rep. Billy Tauzin (R-LA), the Chairman of the full Committee, said in his prepared statement that "Going forward, one thing should be clear: I donít see a need to legislate on false scenarios. We cannot and will not design some elaborate new privacy regime that will take into account every possible daydream of how information could be used. Reality must be taken into account."
Free Trade Agreement Advances In Congress
7/26. The Senate Finance Committee held a business meeting at which it approved S 643, a bill to implement the agreement establishing a U.S. Jordan free trade area. Also, the House Ways and Means Committee held a meeting at which it approved HR 2603, the U.S. Jordan Free Trade Area Implementation Act of 2001. Trade between the U.S. and Jordan is not significant. However, this trade agreement is significant because it may serve as a standard for future trade agreements.
It includes labor and environmental (L&E) conditions. The FTA provides that neither party "shall fail to effectively enforce its" L&E laws. These provisions are controversial, and are at the heart of the current debate over extending fast track trade negotiating authority to the President.
The U.S. Jordan FTA also addresses enforcement of intellectual property rights and electronic commerce. Jordan agreed to ratify and implement the WIPO's Copyright Treaty and WIPO Performances and Phonograms Treaty within two years. The FTA also provides that "each Party shall seek to refrain from: (a) deviating from its existing practice of not imposing customs duties on electronic transmissions; (b) imposing unnecessary barriers on electronic transmissions, including digitized products; and (c) impeding the supply through electronic means of services ..." See also, the U.S. Jordan Free Trade Agreement (FTA) [PDF], signed on October 24, 2000.
Export Administration Act News
7/26. The Senate Banking Committee held a hearing on the nomination of Michael Garcia to be Assistant Secretary for Export Enforcement at the Department of Commerce. Garcia is an Assistant U.S. Attorney for the Southern District of New York, where he was involved in the prosecutions stemming from the World Trade Center bombing and the bombings of U.S. embassies in East Africa. Sen. Paul Sarbanes (D-MD), Chairman of the Committee, praised Garcia. Garcia stated that "I will work hard to ensure that any violations of U.S. dual use exports are detected, investigated and sanctioned."
Sen. Sarbanes said that he wanted the Committee to approve his nomination early next week, and the full Senate to approve it before it goes on its August recess.
Sen. Sarbanes also used the hearing to advocate passage of S 149, the Export Administration Act, a bill which would ease restraints on the export of most dual use products, such as computers and software. However, the bill would also raise penalties for certain violations. The Senate Banking Committee approved the bill on March 22 by a vote of 19 to 1. The current act expires on August 20. Sen. Sarbanes noted that Senate Majority Leader Tom Daschle (D-SD) favors consideration of the bill in the Senate before the August recess.
4th Circuit Rules Jurisdiction May be Based Upon Location of Web Site
7/26. The U.S. Court of Appeals (4thCir) issued its opinion in Christian Science Board of Directors v. Nolan, holding that personal jurisdiction may be based upon maintaining a web site in the territory of a federal district court where the suit is brought.
The Christian Science Board of Directors filed a complaint in U.S. District Court for the Western District of North Carolina against David Nolan and others alleging trademark infringement under the Lanham Act. Nolan was a resident of California. However, Nolan maintained a web site in North Carolina, the content of which was the subject of the law suit. Nolan contracted with a co-defendant in North Carolina to operate the web site for him. Nolan periodically sent content to North Carolina to be added to the web site.
Plaintiff obtained a default judgment against Nolan enjoining him from using the contested marks. He violated this injunction. When he was ordered to appear in response to a civil contempt notice he asserted that the default judgment was void for lack of personal jurisdiction. The District Court rejected this argument. This appeal followed.
The Appeals Court affirmed. It reasoned that the exercise of jurisdiction over Nolan by the District Court in North Carolina was consistent with the North Carolina long arm jurisdiction statute, and did not violate the due process requirement of "minimum contacts" set forth in International Shoe v. Washington, 326 U.S. 310 (1945) and elaborated in Burger King v. Rudzewicz, 471 U.S. 462 (1985).
Trade Secret Definition in EEA Not Unconstitutionally Vague
7/26. The U.S. Court of Appeals (6thCir) issued its opinion in USA v. David Krumrei, holding that the definition of trade secret contained in the Economic Espionage Act (EEA) is not unconstitutionally vague. Krumrei was indicted on one count of violating the EEA, 18 U.S.C. ß 1832(a)(2), by knowingly and without authorization transmitting a trade secret to a competitor of the owner. He asserted that the EEA is unconstitutionally vague. The District Court disagreed. The Appeals Court affirmed. 
EPIC Complains to FTC About Windows XP
7/26. The Electronic Privacy Information Center (EPIC), and 12 other interest groups, filed a complaint [PDF] with the Federal Trade Commission (FTC) against Microsoft alleging that the soon to be released Windows XP operating system will adversely affect the privacy of users, and violate the Federal Trade Commission Act ban on unfair and deceptive trade practices.
The complaint states that "Microsoft has engaged, and is engaging, in unfair and deceptive trade practices intended to profile, track, and monitor millions of Internet users. Central to the scheme is a system of services, known collectively as ".NET," which incorporate "Passport," "Wallet," and "HailStorm" that are designed to obtain personal information from consumers in the United States unfairly and deceptively."
The complainants want the FTC to investigate Microsoft, and then order Microsoft to "revise the XP registration procedures so that purchasers of Microsoft XP are clearly informed that they need not register for Passport to obtain access to the Internet; ... block the sharing of personal information among Microsoft areas provided by a user under the Passport registration procedures absent explicit consent; ... [and] incorporate techniques for anonymity and pseudo- anonymity that would allow users of Windows XP to gain access to Microsoft web sites without disclosing their actual identity".
Finally, the complainants ask the FTC to remedy an implied antitrust violation that was not articulated in the complaint. They want the FTC to require Microsoft to "incorporate techniques that would enable users of Windows XP to easily integrate services provided by non-Microsoft companies for online payment, electronic commerce, and other Internet- based commercial activity".
DOJ Cannot Support Verizon's Pennsylvania 271 Application
7/26. The Department of Justice (DOJ) released its competitive analysis of Verizon's application to provide in region interLATA services in Pennsylvania under Section 271 of the Telecom Act of 1996. The DOJ did not endorse the application because of problems with Verizon's electronic billing. See also, DOJ release.
The report concluded that competitive local exchange carriers (CLECs) "have made significant inroads into the local markets in Pennsylvania. Electronic billing, however, may be an important factor with respect to whether entry will continue in the foreseeable future. Because of the timing of this application, Verizon has not been able to demonstrate that its billing system modifications have fully resolved its billing problems in actual commercial operations. Absent such evidence, the Department cannot support Verizon's application at this time. The Department notes, however, that the Commission may have additional information during its consideration of Verizon's application. The Commission may therefore be able to assure itself that Verizon's billing problems have been resolved and may be in a position to approve Verizon's application by the close of these proceedings."
John Thorne, Verizon SVP and Deputy General Counsel, had this reaction: "We are pleased the Justice Department recognizes that with more than one million local lines already controlled by competitors, there is strong evidence of broad-based competition in Pennsylvania. Todayís DOJ evaluation, combined with the Pennsylvania Public Utility Commissionís report supporting our long-distance bid, means that our application is on track for FCC approval."
Smart Currency
7/26. The Senate Banking Committee held a hearing on the nomination of Henrietta Fore to be Director of the Mint. She testified that "Our currency must be smart, with an electromagnetic signature ..." She did not elaborate, and none of the Senators present questioned her on this topic. Sen. Sarbanes said he will seek her confirmation by the full Senate before the August recess.
Friday, July 27
8:30 AM. Daniel Griswold and Daniel Ikenson, both of the Cato Institute, will speak on "Threats to Trade Promotion Authority: Antidumping Laws and Labor and Environmental Sanctions." Location: Room B-339, Rayburn Building.
Monday, July 30
1:00 PM. The Senate Judiciary Committee will hold a hearing on the nomination of Robert Mueller to be Director of the Federal Bureau of Investigation. Sen. Patrick Leahy (D-VT) will preside. Location: Room 216, Hart Building.
1:00 PM. Opening statements in the Copyright Office's (CO) arbitration proceeding regarding webcasting of digital sound recordings. The CO has scheduled a "180-day arbitration period to set the rates and terms for two compulsory licenses. One license allows certain eligible nonsubscription services to perform sound recordings publicly by means of digital audio transmissions and the other allows a transmitting organization to make an ephemeral recording of a sound recording for the purpose of making a permitted public performance." Presentation of direct cases is scheduled for July 31 through September 13. See, notice published in Federal Register, July 23, 2001, Vol. 66, No. 141, at Pages 38324 - 38326.
1:30 PM. The President's Advisory Committee on Trade Policy and Negotiations will hold a meeting on 1:30 to 4:30 PM. The meeting will be closed to the public from 1:30 to 4:00 PM, and open to the public from 4:00 to 4:30 PM. See, notice in Federal Register. For more information, contact Heather Wingate (Office of the USTR) at 202-395-6120. Location: USTR ANNEX Building in Conference Rooms 1 and 2, located at 1724 F Street, NW, Washington DC.
People and Appointments
7/26. Lynn Turner, who has been Chief Accountant of the SEC since July 1998, will leave the SEC in August, and return to Colorado State University. See, SEC release.
7/26. The Senate Judiciary Committee approved the nomination of James Ziglar to be head of the Immigration and Naturalization Service (INS) by a vote of 19-0.
7/26. Joel Taubenblatt will become Legal Advisor to Tom Sugrue, Bureau Chief of the FCC's Wireless Telecommunications Bureau. Taubenblatt was previously a Senior Staff Attorney in the Commercial Wireless Division of the Bureau. He joined the FCC in July 1996.
7/26. Catherine Seidel will join the FCC's Wireless Telecommunications Bureau as Associate Bureau Chief and Chief of Staff. She was previously Chief of the Telecommunications Consumers Division of the FCCís Enforcement Bureau. Before that she served as Chief of the Wireless Bureauís Enforcement and Consumer Information Division. Before joining the FCC in 1994, she worked for Verizon.
7/26. Kelly Quinn will join the FCC's Wireless Telecommunications Bureau's Auctions and Industry Analysis Division as Deputy Chief. She was previously a Legal Advisor in the Office of the Bureau Chief. Before that she was an associate at the law office of Squire Sanders & Dempsey.
More News
7/26. The Department of Justice filed its opposition to Microsoft's petition for rehearing in the antitrust case.
7/26. The GAO released its report [PDF] titled "Critical Infrastructure Protection: Significant Challenges in Developing Analysis, Warning, and Response Capabilities." The GAO presented this as testimony to the Senate Judiciary Committee's Subcommittee on Technology, Terrorism and Government Information.
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