Tech Law Journal Daily E-Mail Alert
October 19, 2001, 9:00 AM ET, Alert No. 290.
TLJ Home Page | Calendar | Back Issues
Sen. Bennett Says SEC Should Require Cyber Security Disclosure
10/18. Sen. Robert Bennett (R-UT) stated that he is urging the new Securities and Exchange Commission (SEC) Chairman, Harvey Pitt, to adopt rules requiring covered companies to report on their preparations for cyber threats. Sen. Bennett stated that the purpose would be to incent companies to devote more resources to the threat, just as an earlier similar rule caused companies to engage in Y2K remediation efforts.
Sen. Bennett spoke on this matter at the Center for Strategic and International Studies' (CSIS) conference titled "Strengthening Homeland Cyberdefense". He said that a important part of the Y2K remediation effort was the SEC's rule requiring Y2K reporting. He related that the SEC "said we are going to require you to reveal on your reporting statements your level of Y2K preparedness. We will by fiat define that as a material item that has to be reported. And then the companies started to scramble, because when they have to deal with the SEC, it suddenly gets serious."
Sen. Bennett continued: "Now, I have talked to the new Chairman of the SEC about this aspect, because once again, the experience we have had with Y2K is that these were not sunk costs, on which there was no return on investment."
"I have had a number of companies come to me and say, 'You know, we really grumbled and hated you with respect to Y2K, but when we did all of the remediation, and looked at what a much better IT system we had than before we made the fixes, we said, we are going to get a significant return on this investment.' If you adopt the fail and fix notion with respect to cyber terrorism, you are going to have much higher costs overall, than if you go in to establish the security up front. We can get the SEC and other agencies to get people to understand that, we will go a long way towards changing the culture in American industry, and get the advantages that come out of the remediation activities," said Sen. Bennett.
Sen. Bennett also spoke with reporters after the event. He stated that he would like to see the SEC adopt rules, rather than have the Congress impose a mandate on the SEC through legislation. He added: "The conversations are still very preliminary, because Harvey Pitt is just beginning to get his feet under his desk, so we have not got anything specific going. But, I have had the conversation with him that this is an area where the SEC can be helpful. And he has agreed to talk to me about it. And, we probably won't see anything definitive out of them, maybe until sometime next year." He added, "I am going on the Y2K precedent, that it can be done with rulemaking. And, I will be in conversations with the folks at the SEC to see what would make sense and how far they can go."
Sen. Bennett Promotes Cyber Security Bill
10/18. Sen. Robert Bennett (R-UT) spoke in favor of S 1456, the Critical Infrastructure Information Security Act of 2001, a bill which he introduced, along with Sen. Jon Kyl (R-AZ). One of the main purposes of the bill is to encourage information sharing pertaining to cyber security issues, by removing legal disincentives for such actions. He spoke at the Center for Strategic and International Studies' (CSIS) conference titled "Strengthening Homeland Cyberdefense" in Washington DC.
The bill would provide a Freedom of Information Act exemption for certain cyber security information provided to certain federal agencies, including the NIPC, FCC, Justice Department, Defense Department, and Commerce Department. The bill would also provide an antitrust exemption for certain collaboration on cyber security issues.
FOIA Exemption. Sen. Bennett stated that "if information comes to the government for analysis, and then under the Freedom of Information Act, the government reveals that to the terrorists, that is really not too smart. So, what we are saying is that you can share this kind of information with the government, the Freedom of Information Act will not apply, and the government will do its analysis, and then share that analysis back."
"Now there are those who say to me: 'Oh! This is terrible. The Freedom of Information Act protects the public's right to know, and you have to prevent -- you are striking a blow against First Amendment, and freedom, and all of the rest of that, for the public's right to know,' said Sen. Bennett. "The fact is, if you do not put this kind of legislation in place, private industry will not tell the government. So, the public is not going to get this information to know either way. You are making absolutely no difference to the public's access to this information. You are making a significant difference to the analyst's right to this information."
Prospects for Passage. Sen. Bennett says that there is wide support for the bill, but there is dispute as to how it should be handled. He said: "Hell hath no fury like a Congressional chairman whose jurisdiction is challenged. And, the various chairmen of the various committees all say, 'Yes, this is a very important issue, and I will handle it.' " He continued that the Senate Majority Leader, "Sen. Daschle, is struggling with how he can deal with the various maharajas that preside over these Congressional committees. Everyone of whom, as I say, is willing to take on the issue, but not one of which is willing to give up any jurisdiction. And when everybody is in charge, that means that nobody is in charge. It has been interesting. The bill -- everybody likes my bill -- we can't find a home for it."
APEC Meeting Addresses E-Commerce
10/18. Representatives of the twenty-one nations participating in the Asia Pacific Economic Cooperation (APEC) conference Shanghai, China, issued a joint statement. The statement expressed "confidence in the immense potential of Information and Communications Technology (ICT) and its applications in upgrading the welfare and living standard of our people in the APEC region". The statement also addressed several specific issues, including e-commerce trade barriers, privacy, consumer protection, and closing digital divides.
Promoting E-Commerce. The statement "endorsed the proposal of the establishment of the APEC E-commerce Business Alliance. Ministers also welcomed the proposal to strengthen economic and technical cooperation in the area of E-commerce with a view to narrowing the gap between member economies in the application of E-commerce."
E-Commerce Trade Barriers. The statement " recognised the growth of global electronic commerce and the importance of a legal and policy framework which both ensures business and public confidence and avoids unnecessarily restrictive trade barriers while respecting national policy objectives in order to allow E-commerce to develop its full potential to create new opportunities for trade."
Online Privacy and Consumer Protection. The statement "welcomed the progress made by Electronic Commerce Steering Group (ECSG)". It also "endorsed the proposal by the ECSG to develop APEC guidelines for online consumer protection and noted the proposal to organize a public/ private sector forum regarding online privacy and E-commerce during 2002."
Digital Divides. The statement "reaffirmed commitments to triple access to the Internet by 2005, and to ensure that all groups within an economy have access individually or through community- based services to the Internet by 2010".
New WTO Round
10/18. Representatives of the twenty-one nations participating in the Asia Pacific Economic Cooperation (APEC) conference Shanghai, China, reaffirmed their support for a new round of WTO trade negotiations. See, joint statement.
10/18. Secretary of State Colin Powell gave a speech in Shanghai, China, in which he told his audience to "keep investing, keep opening up avenues of opportunities for increased trade, keep destroying barriers, let's move quickly. We want to see China and Taiwan enter the World Trade Organization. We need to see the next round get started or launched; we need to keep moving forward, we need to restore confidence in the world's economies ..."
Funding for Cyber Security Programs
10/18. Harris Miller, President and CEO of the ITAA, gave a speech in which he advocated a $10 Billion federal cyber security program. He spoke at the Center for Strategic and International Studies' (CSIS) half day conference titled "Strengthening Homeland Cyberdefense" in Washington DC.
He stated that "strong steps to upgrade cyber security must be taken immediately. These efforts must be conducted as part of critical infrastructure protection for healthcare, utilities, transportation, telecommunications and other critical industries. To do otherwise could leave the nation vulnerable to cyber attacks. I personally think $10 billion in federal spending, grants and loans is needed to get the job done."
He continued that $2.5 Billion should be appropriated to upgrade federal government information systems. $3 Billion in grants should be provided to state and local governments and other public entities to upgrade information systems. $500 Million in grants should be made available to universities to provide more curriculum and training in information security. Finally, Miller argued that $4 Billion in loans should be provided to small and medium sized businesses to prepare for cyber attacks.
More News
10/18. The temporary adjournment of the House of Representatives, and the closing of its offices, due to biological threats, led to the postponement of all scheduled hearings. The House Commerce Committee's Subcommittee on Telecommunications and the Internet postponed its hearing titled "Transition to Digital Television: Progress on Broadcaster Buildout and Proposals to Expedite Return to Spectrum". The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property postponed its hearing titled "Intellectual Property Litigation".
10/18. The U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in Celtronix Telemetry v. FCC, No. 00-1400.
Net Tax Moratorium Set to Expire This Weekend
10/18. The Senate adjourned until Tuesday, October 23, without passing legislation to extend the existing moratorium on Internet access taxes, and multiple and discriminatory taxes on Internet commerce. The House passed HR 1552, the Internet Non-Discrimination Act, by a unanimous voice vote on October 16, extending the moratorium for two years.
Section 1101(a) of the Internet Tax Freedom Act, which was enacted in late 1998, provides that "No State or political subdivision thereof shall impose any of the following taxes during the period beginning on October 1, 1998, and ending 3 years after the date of the enactment of this Act ... (1) taxes on Internet access, unless such tax was generally imposed and actually enforced prior to October 1, 1998 ... (2) multiple or discriminatory taxes on electronic commerce." This moratorium expires on October 21.
As a consequence of the Senate's inaction, states will be free to impose new Internet access taxes or multiple or discriminatory taxes on e-commerce next week.
Friday, Oct 19
Neither the House nor the Senate will meet.
Day two of a three day conference of the American Intellectual Property Law Association (AIPLA). Location: Crystal Gate Marriott Hotel, 1700 Jefferson Davis Highway, Arlington, Virginia.
9:30 AM. The National Association of State Boards of Education (NASBE) will hold a press conference to release a report titled "Any Time, Any Place, Any Path, Any Pace: Taking the Lead on e-Learning Policy." For more information, contact Dave Griffith at 703-684-4000. Breakfast will be served at 9:00 AM. See, NASBE release. Location: Lisagor Room, National Press Club, 529 14th Street, NW, Washington DC.
Saturday, Oct 20
Day three of a three day conference of the American Intellectual Property Law Association (AIPLA). Location: Crystal Gate Marriott Hotel, 1700 Jefferson Davis Highway, Arlington, Virginia.
Sunday, Oct 21
The moratorium on Internet access taxes, and multiple and discriminatory taxes on Internet commerce, contained in the Internet Tax Freedom Act will expire.
Monday, Oct 22
Neither the House nor the Senate will be in session.
1:00 - 2:30 PM. The Electronic Privacy Information Center (EPIC) and the Privacy Foundation will sponsor a panel discussion on the implications of new systems for identification and tracking on personal privacy. The speakers will be Richard Smith (Privacy Foundation), Robert Smith (Privacy Journal), Jeffrey Rosen (New Republic), John Woodward (RAND), and Whitfield Diffie (Sun Microsystems). Marc Rotenberg (EPIC) will moderate. Location: National Press Club, 529 14th Street, NW, Washington DC.
Fifth Circuit Construes Innocent Infringer Defense
10/18. The U.S. Court of Appeals (5thCir) issued its opinion in Dial One v. BellSouth, a case involving the innocent infringer defense in trademark actions. Plaintiff Dial One is a franchise holder. Two other plaintiffs are franchisees. BellSouth and other defendants published yellow pages and white pages directories that listed as a franchisee an entity that was not in fact a franchisee. Plaintiffs filed a complaint in U.S. District Court (EDLa) against BellSouth and others alleging infringement of the Dial One trademark in violation of the Lanham Act. Defendants asserted the innocent infringer defense. The District Court awarded Dial One lost franchise fees, and awarded the franchisee plaintiffs lost profits. The Court of Appeals affirmed.
About Tech Law Journal
Tech Law Journal is a free access web site and e-mail alert that provides news, records, and analysis of legislation, litigation, and regulation affecting the computer and Internet industry. This e-mail service is offered free of charge to anyone who requests it. Just provide TLJ an e-mail address.

Number of subscribers: 2,197.

Contact: 202-364-8882; E-mail.
P.O. Box 15186, Washington DC, 20003.

Privacy Policy

Notices & Disclaimers

Copyright 1998 - 2001 David Carney, dba Tech Law Journal. All rights reserved.