|Senate Passes Bill to
Extend Internet Tax Moratorium
|11/15. The Senate passed HR
1552, the Internet Nondiscrimination Act (INDA), without
amendment, by a voice vote, on Thursday evening, November 15.
This bill extends the moratorium on Internet access taxes, and
multiple and discriminatory taxes on Internet commerce, for
two years. In 1998 the Congress passed the Internet Tax
Freedom Act (ITFA), creating a three year moratorium that
expired on October 21, 2001. The INDA amends and extends the
ITFA. The House passed the INDA on October 16. President Bush
will promptly sign the bill.
The Senate also rejected, on a roll call vote of 57 to 43, an
amendment offered by Sen.
Mike Enzi (R-WY) and Sen.
Byron Dorgan (D-ND), that would have allowed state and
local taxing authorities to require out of jurisdiction
Internet sellers, and other remote sellers, to collect sales
taxes. See, statement
by Sen. Enzi.
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. Senators and
Representatives who favor giving state and local governments
authority to require remote sellers to collect sales taxes
have sought to use the extension of the ITFA as leverage for
passage of their proposals.
Sen. George Allen
(R-VA), a supporter of the ITFA and INDA, stated during
the debate that "what is being tried here with the Enzi
Dorgan amendment is to abrogate and negate a settled
constitutional law from court decisions, whether it was the
Quill decision or Bella Hess decision that says there can't be
taxation without representation." See, Allen
statement. Meanwhile, Rep.
Chris Cox (R-CA), the sponsor of HR 1552, stated that
"The bottom line is that consumers know that for the next
two years, the Internet will not be singled out for unfair tax
|House Holds Hearing on
|11/15. The House
Commerce Committee's Subcommittee on Commerce, Trade, and
Consumer Protection held a hearing titled "Cyber
Security: Private Sector Efforts Addressing Cyber
Threats". Witnesses testified regarding the nature of
cyber threats, and methods for dealing with cyber threats.
Some witnesses opposed government interference with the market
and government security mandates. Some also advocated passage
of legislation to give businesses less disincentive to share
information regarding cyber threats, including FOIA and
antitrust exemptions. Some witnesses advocated tougher
criminal sanctions, more funding for law enforcement, and more
funding and tax incentives for education, training and
development of new cyber security technologies.
Rep. Cliff Stearns
(R-FL), the Chairman of the Subcommittee, presided. He said in
statement that "As for cyber terrorism, since
September 11th we have learned that determined terrorists do
have the wherewithal to undertake the unexpected. Terrorists
and their recruits also have grown up in the digital age and
thus most probably possess the technical skills to undertake
concerted and effective cyber terror attacks. And as the real
and virtual worlds have become more closely intertwined, cyber
terrorism can potentially engender greater pain and tragedy
and thus become more attractive to unscrupulous
Howard Schwartz, Chief Security Officer of Microsoft,
testified that "I believe we need to let the Internet
economy and the information technology industry operate as a
market. That means that it must operate without government
Schwartz also testified that "Microsoft strongly supports
adding new cyber crime provisions to the anti terrorism laws
and the criminal code. We see a need for increased funding for
law enforcement personnel, training, and equipment. We support
tougher penalties on criminal hackers, such as civil
forfeiture of personal property used in committing these
crimes, and we seek clear guidance from the Sentencing
Commission on how courts should punish these convicted felons.
We strongly support greater international cooperation among
law enforcers in these time-sensitive investigations. And we
want ISPs to have the authority to share information
voluntarily with the entire government once they see that life
or limb are endangered."
In contrast, Warren Axelrod of Pershing testified that current
criminal laws and law enforcement efforts provide no
deterrence to illegal cyber attacks. He said the problem is
that almost nobody gets caught.
John Casciano, an SVP at SAIC,
testified that there are several things that Congress might
do, including encouraging industry to "define standards
for due diligence in the development and validation of secure
software by developers, and its secure implementation and
operation by users. In the event these standards were not met
they would provide a basis for judicial allocation of
liability and compensation." He also suggested "tax
subsidies or other incentives for improved cyber protections
for certain industries", and federal funding for
education and training programs for cyber security skills and
for the development of new cyber security technologies.
All witnesses concurred that the Congress should pass
legislation to provide an exemption from the Freedom of
Information Act (FOIA) for cyber security information
voluntarily shared with the federal government. On September
24, Sen. Bob Bennett
(R-UT) introduced S
1456, the Critical Infrastructure Information Security Act
(CIISA), a bill to give companies incentives to share
information in order to help defend against cyber attacks. It
contains both FOIA and antitrust exemptions.
See, prepared testimony of witnesses: Howard
Schmidt (Microsoft), John
Casciano (SAIC), Christopher
Klaus (Internet Security Systems), Mary
Ann Davidson (Oracle), David
Morrow (EDS), Warren
Axelrod (Pershing), Dave
McCurdy (EIA), and Mark
Doll (Ernst & Young).
Rep. Billy Tauzin
(R-LA), the Chairman of the full Committee, submitted a statement
for the record. At the conclusion of the hearing Rep. Stearns
stated that he hopes "industry will step up to the plate
... if not, obviously, Congress could mandate security
standards, which we don't want to do."
|DOJ Files Competitive
Impact Statement in Microsoft Antitrust Case
|11/15. The Department of Justice's Antitrust Division filed its Competitive
Impact Statement (CIP) with the U.S. District Court (DDC)
in U.S. v. Microsoft, the government's antitrust case. This
CIP reviews the background of the case, the allegations
contained in the complaints, and the June 28, 2001 opinion
of the U.S. Court of Appeals (DCCir). It also explains the
provisions of Proposed
Final Judgment (PFJ) filed on November 2, 2001. Finally,
the CIP explains why the DOJ was justified in agreeing to the
terms contained in the PFJ.
The CIP states that "The United States considered a
number of alternatives to the Proposed Final Judgment. The
United States is satisfied, however, that the requirements and
prohibitions contained in the Proposed Final Judgment,
supported by strong compliance and enforcement procedures,
provide a prompt, certain and effective remedy for the
violations Microsoft has committed."
The CIP also points out what would have been the consequences
of protracted litigation: "Given the substantial
likelihood that Microsoft would avail itself of all
opportunities for appellate review of any non consensual
judgment, the United States estimated that a litigated result
would not become final for at least another two years. The
remedies contained in the Proposed Final Judgment are not only
consistent with the relief the United States might have
obtained in litigation, but they have the advantages of
immediacy and certainty."
As for Microsoft's competitors and others who advocated
harsher penalties, the CIP points out that "any person
who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover
three times the damages suffered ..."
|DOJ and FTC to Hold Hearing
on Antitrust and IPR
|11/15. The Antitrust
Division and FTC
announced that they will jointly hold a hearing on antitrust
and intellectual property. The hearing will examine "the
importance of the various types of intellectual property to
businesses and innovation, the frequency and types of
licensing, pooling and other arrangements for transfer or
joint use of intellectual property, competition issues in
patent settlements and unilateral refusals to deal involving
intellectual property." See, DOJ
release, and FTC
notice to be published in Federal Register. The hearings
will be held at the FTC headquarters, at 600 Pennsylvania
Ave., NW, in Washington DC, and will be open to the public.
None of these items states the time or date of the hearing.
|Politics, Antitrust and
|11/14. Rep. John
Conyers (D-MI) introduced HR 3288, the "Fairness in
Antitrust in National Sports Act of 2001". The acronym is
the FANS Act. The bill would amend the Clayton Act to make the
antitrust laws applicable to the elimination or relocation of
major league baseball franchises. It was referred to the House Judiciary
Committee, of which Rep. Conyers is the ranking Democrat.
Rep. Conyers submitted a statement for the Congressional
Record in which he said that "I was shocked by Major
League Baseball's decision just two days later to eliminate
two teams as early as December 15th of this year. This is why
it is imperative that Congress move quickly on the FANS Act to
insure that anti competitive decisions by Major League
Baseball concerning the elimination or relocation of teams are
subject to the antitrust laws like all other professional
sports and businesses."
The bill is also cosponsored by much of the Minnesota
delegation. Their state would be impacted by the loss of the Minnesota
Twins. Montreal, home of the Expos,
the other team likely to be eliminated, has no representation
in the Congress.
11/14. Sen. Paul
Wellstone (D-MN) introduced S 1704, the Senate version of
the FANS Act. It is cosponsored by Sen. Mark Dayton (D-MN).
|Harvey Pitt Addresses
|11/14. SEC Chairman
Harvey Pitt gave a speech
in Washington DC in which he stated that securities regulation
will have to adapt to both new electronic technologies and
differing regulatory and accounting standards around the
world. However, he offered no framework for how "the
global community could regulate the global marketplace and
create a veritable seamless web of interconnectedness".
Pitt said that "We live in a global economy, with global
markets, engaged in fierce global competition, with boundaries
that are expanding exponentially given the Internet and
changing technology. If there ever was a time when we could
view the world solely through the prism of U.S. securities
regulation, that time is also long past."
He addressed the once "clear boundaries separating
categories of investment intermediaries", changes in
financial services and investment products, the changing needs
and natures of investors, and approaches to full and fair
He also stated that "Recent studies show that roughly one
out of every two U.S. households invests in securities. While
retail investors today have greater access, via electronic
technology, to financial information and execution systems, it
is an open question whether these same investors have
sufficient training and adequate time to use these
tools." However, he offered no further elaboration on
|Senate Passes Conference
Report on CJS Bill
|11/15. The Senate agreed to the conference report on HR
2500, the FY 2002 appropriations bill for the Departments
of Commerce, Justice, and State, the Judiciary, and related
agencies. The House passed this conference report on November
14. This bill includes funding for most of the technology
related departments and commissions, including the USPTO, FCC,
FTC, DOJ, NTIA, NIST, BXA, and SEC.
|Friday, Nov 16
|Day two of a three day conference hosted by the Federalist Society titled
"Fifteenth Annual National Lawyer's Convention".
form and agenda.
Theodore Olson, Solicitor General of the U.S., will
speak at 1:45 PM. The Mayflower Hotel, 1127 Connecticut Ave.,
10:00 AM. The House
Government Reform Committee's Government Efficiency,
Financial Management and Intergovernmental Relations
Subcommittee will hold a hearing titled Oversight Hearing
on National Identification Cards. Location: Room 2154,
1:00 PM. The Electronic Privacy
Information Center (EPIC) will host an event pertaining to
proposals for a national identification card system.
The speakers will include Marc Rotenberg (EPIC), Brad Jansen
(Free Congress Foundation), and Lori Cole (Eagle Forum). The
event will also include a theatrical shredding of simulated
national identification cards. Location: East Front House
Grass Area next to the Capitol (near Independence and First
|Monday, Nov 19
|11:00 AM - 12:00 NOON. The American
Enterprise Institute (AEI) will host an event titled
"Trade Policy Briefing: After Doha - What's Next?"
The speakers will be Claude Barfield, Michael Finger, and
Sarath Rajaptirana. They will analyze the decisions made at
the WTO Ministerial Meeting held November 9-13 in Doha, Qatar.
Location: AEI, 12th Floor, 1150 Seventeenth Street, NW.
|Tuesday, Nov 20
|10:00 AM. The Commerce Department's Technology
Administration will hold a public meeting existing public and
private high tech workforce training programs. The meeting is
being held pursuant to §§ 115(a) and 115(b) of the American
Competitiveness in the Twenty-First Century Act of 2000
(Public Law 106-313), which requires the Secretary of Commerce
to conduct a study and prepare a report to Congress. Location:
Room 4813, Commerce Department. See, notice
in Federal Register.
|Wednesday, Nov 21
|2:00 - 5:00 PM. The National
Science Foundation's (NSF) Advisory Committee for
Cyberinfrastructure will hold a meeting to develop a plan for
the preparation of a report to the NSF concerning advanced
cyber infrastructure and the evaluation of the existing
Partnerships for Advanced Computational Infrastructure. See, notice
in Federal Register.. Location: Room 130, NSF, 4201 Wilson
Blvd., Arlington, VA.
|11/14. The FCC announced
the creation of a Homeland Security Policy Council. FCC Chief
of Staff Marsha MacBride will be its Director. The two Deputy
Directors will be be Linda Blair and Brad Berry, who are
Deputy Chiefs in the Enforcement Bureau. See, FCC
11/15. The Senate
Judiciary Committee postponed it November 11 business
Telecom (BT) stated that it "received final court
approval prior to the demerger of the mmO2 business. The
demerger process involves the creation of two new holding
companies: one for the BT Group businesses, and one for the
mmO2 businesses through a court approved Scheme of
Arrangement. The High Court of Justice in England and Wales
today completed hearings which sanctioned the Scheme of
Arrangement and approved the reduction of the share capital of
BT provided for under the Scheme." See, BT
11/15. The Court of Appeal of California issued its opinion
[PDF] in ComputerXpress v. Lee Jackson, a suit involving the
California SLAPP statute.
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