Tech Law Journal Daily E-Mail Alert
November 19, 2001, 9:00 AM ET, Alert No. 311.
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NextWave and FCC Make Announcement
11/16. FCC Chairman Michael Powell released a statement regarding its dispute with NextWave over spectrum licenses. He wrote that "discussions have concluded between the government, the auction 35 winners and Nextwave." He added that "Before the agreement is effective, it must be ratified by the Department of Justice, which we expect. In addition, Congressional action will be required to implement the settlement." His statement lacks details on the terms of this agreement.
Background. NextWave Communications obtained spectrum licenses at FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses under an installment plan, thus creating a debtor creditor relationship between NextWave and the FCC. NextWave did not make payments required by the plan, and filed a Chapter 11 bankruptcy petition. The FCC was blocked by the bankruptcy court, citing 525 of the Bankruptcy Code. The U.S. District Court (SNDY) affirmed. The U.S. Court of Appeals (2ndCir) issued its order reversing and remanding the case on Nov. 24, 1999; it issued its opinion explaining its reversal in May 2000. The FCC then re-auctioned this spectrum to Verizon Wireless, VoiceStream and other successful bidders, which intend to use it for 3G wireless, and other, services.
DC Circuit. NextWave petitioned the FCC to reconsider its cancellation of its licenses. The FCC refused, and NextWave petitioned for review by the Court of Appeals (DCCir). The DC Circuit ruled on June 22, 2001, that the 2nd Circuit had not already addressed NextWave's bankruptcy claims. It wrote in its opinion that the FCC is prevented from canceling the spectrum licenses by  525 of the Bankruptcy Code. It wrote that the FCC "violated the provision of the Bankruptcy Code that prohibits governmental entities from revoking debtors' licenses solely for failure to pay debts dischargeable in bankruptcy. The Commission, having chosen to create standard debt obligations as part of its licensing scheme, is bound by the usual rules governing the treatment of such obligations in bankruptcy." See, 254 F.3d 130 (D.C. Cir. 2001).
Powell. Chairman Powell further wrote that the FCC "has fought aggressively for years to recapture these licenses, insisting they were public assets that could not be held by private companies (and insulated from repossession in bankruptcy) that did not comply with the terms of the auction. Regrettably, the D.C. Circuit has interpreted the law differently, and without a prospective legislative change, the public will bear this risk in future auctions."
NextWave. NextWave also issued a release. It states: "The agreement provides for NextWave to receive net proceeds in excess of $6 billion from the U.S. government in exchange for the C and F block PCS licenses, and it allows the FCC to move forward with implementation of Auction 35. The documentation of the agreement has been finalized, and it has been signed by NextWave and the wireless service providers. The agreement is contingent on Congress enacting legislation, and it also must be approved by the bankruptcy court overseeing NextWave's Chapter 11 reorganization. Following those events, the Company intends to file a new plan of reorganization."
Trial of Terrorists Before Military Tribunals
11/16. President Bush published in the Federal Register a Military Order dated November 13, 2001 regarding "Detention, Treatment, and Trial of Certain Non Citizens in the War Against Terrorism". It provides for the detention and trial by military tribunal of terrorists who are not U.S. citizens. The order does not define the term terrorism; the order does not explicitly include, or exclude, cyber terrorism. Moreover, the President retains authority to determine which individuals will be subject to trial by military tribunal. See, Federal Register, November 16, 2001, Vol. 66, No. 222, at Pages 57831 - 57836.
The President's order applies to "any individual who is not a United States citizen with respect to whom I determine from time to time in writing that: (1) there is reason to believe that such individual, at the relevant times, (i) is or was a member of the organization known as al Qaida; (ii) has engaged in, aided or abetted, or conspired to commit, acts of international terrorism, or acts in preparation therefor, that have caused, threaten to cause, or have as their aim to cause, injury to or adverse effects on the United States, its citizens, national security, foreign policy, or economy; or (iii) has knowingly harbored one or more individuals described in subparagraphs (i) or (ii) ..."
Senators Specter and Leahy Call for Hearing on Military Tribunal Order
11/15. Sen. Arlen Specter (R-PA) and Sen. Patrick Leahy (D-VT) went to the floor of the Senate on Thursday, November 15, to challenge President Bush's order regarding the use of military tribunals to try terrorists, and to call for a hearing. Sen. Leahy is Chairman of the Senate Judiciary Committee; Sen. Specter is a senior Republican member. See, Congressional Record, November 11, 2001, at pages S11888-90.
Sen. Specter said that "I have written today to the chairman of the Judiciary Committee suggesting that prompt hearings be held on this subject." He later suggested holding a hearing on November 27 that would include ttestimony from Attorney General John Ashcroft.
He continued that "The Constitution provides that the Congress is empowered to define and punish violations of international law, as well as to establish courts with exclusive jurisdiction over military offenses. Under articles of war, enacted by Congress, and statutes, the President does have the authority to convene military commissions to try offenses against the law of war. Military commissions could be convened to try offenses, whether committed by U.S. service members, civilian U.S. citizens, or enemy aliens, and a state of war need not exist. So there has been a delegation of authority by the Congress. But under the Constitution it is the Congress that has the authority to establish the parameters and the proceedings under such courts."
Sen. Leahy responded that "we should have hearings on this -- actually a number of these steps. One of the difficult things, as the Senator knows, is getting the Attorney General to come up here and testify." Sen. Leahy and other Democrats on the Senate Judiciary Committee viciously criticized Ashcroft during his confirmation hearing earlier this year.
Senators Debate Doha Agreement and New WTO Round
11/15. Sen. Frank Murkowski (R-AK) praised the results of the meeting in Doha. He said that "yesterday the WTO concluded its fourth ministerial meeting in Doha, Qatar. Circumstances leading to this meeting were not auspicious. There is a war on, after all, and the Middle East is not the most comfortable place for the champions of globalization and progress. With the global economic slowdown, protectionism is on the rise. Not exactly the best time to undertake talks to expand global trade."
Sen. Murkowski said that "the WTO ministerial meeting was a great success. The WTO initiated a new Round of international trade negotiations, setting forth an ambitious agenda by overcoming difficult objections from the EU, the developing world, and even those in this country who are less than appreciative of the importance of international trade." Cong. Record, November 15, pages S11933-4.
11/15. Sen. Max Baucus (D-MT) was less impressed by the Doha meeting. "I am unsettled by the results of this session in several areas. The agreement reached today in Doha makes it even more clear why Congress must have deeper involvement in our international trade policy. Without a doubt, there are positive items in the documents to launch the negotiation. I am pleased that the United States was able to negotiate forward looking language on agriculture. There are some good things there -- for example, goals of improving market access and reducing market distortions, particularly export subsidies. But these are vague commitments, and Europe and some of its allies have already demonstrated their strident opposition to meaningful progress in this area. The devil is in the details -- and the details have yet to be worked out. On the other side of the ledger, I am extremely troubled by the decision to re-open the agreements reached just a few years ago on antidumping and anti-subsidy measures." Cong. Record, November 15, page S11899.
Sen. Baucus is Chairman of the Senate Finance Committee, which has jurisdiction over most trade related issues. Sen. Murkowski is a senior Republican on the Committee.
Sen. Leahy Introduces Bill on FCRA Statute of Limitations
11/16. Sen. Patrick Leahy (D-VT) and Sen. Charles Grassley (R-IA) introduced S 1723, a bill to amend the Fair Credit Reporting Act (FRCA) with respect to the two year statute of limitations. The purpose of the bill is to alter the consequences of the November 13 opinion [PDF] of the Supreme Court of the U.S. in TRW v. Adelaide Andrews. The bill was referred to the Senate Banking Committee.
FCC Commissioners Debate Regulatory Classification of DSL
11/16. The FCC announced, but did not release, its order (FCC 01-338) approving SBC's Section 271 application to provide in-region interLATA service originating in Arkansas and Missouri. This was expected. SBC may now offer long distance phone service in these states. See, FCC release and SBC release. (CC Docket No. 01-194.)
In addition, three of the four FCC Commissioners wrote separate statements in which they addressed the FCC's regulatory treatment of high speed Internet access service in its yet to be released order. At issue is the interconnection requirements of 47 U.S.C. 251. Specifically,  251(c)(4) provides, in part, that "each incumbent local exchange carrier has the following duties: ... (A) to offer for resale at wholesale rates any telecommunications service that the carrier provides at retail to subscribers who are not telecommunications carriers; and (B) not to prohibit, and not to impose unreasonable or discriminatory conditions or limitations on, the resale of such telecommunications service ..."
Commissioner Kathleen Abernathy wrote in her statement that the FCC "appropriately concludes ... that, because we have never held that an incumbent LEC's DSL Internet access service -- as opposed to a distinct end-user DSL transport service -- is subject to section 251(c)(4), we cannot find that SBC is in violation of checklist item 14. Whether SBC's DSL Internet access service is subject to section 251(c)(4) turns on whether the provision of that service entails the provision of a "telecommunications service . . . at retail." The Commission has prudently declined to reach a definitive conclusion on this issue in this adjudicatory proceeding in light of the 90-day statutory deadline for decision and the fact that our ultimate resolution of this issue likely will have significant implications in other regulatory contexts." (Footnote omitted.)
However, she added that "my analysis of this question is not free from doubt, and both I and the Commission may adopt a different approach in the future based on a more fully developed record."
Similarly, Commissioner Michael Copps wrote in his statement that "a separate proceeding with a full record can clarify the situation ..." He continued: "I am seriously troubled that, for small business and residential customers, SBC does not make available for resale pursuant to section 251(c)(4) any DSL service offerings. SBC currently offers two types of broadband DSL services. First, SBC sells directly to large businesses. These services are retail offerings, and SBC makes them available at a wholesale discount to competitors wishing to resell them. For small businesses and residential customers, however, SBC generally provides DSL services only to its own Internet provider and to unaffiliated Internet providers. Citing the AOL Bulk Services Order, SBC claims that it is not providing DSL at retail, thus triggering no obligations under section 251(c)(4). Yet, a strong argument can be made that the AOL Bulk Services Order was premised on the expectation that there would be a retail offering from which discounts would be calculated."
In contrast, Commissioner Kevin Martin wrote in his statement that he supports the Order, and that "While the Commission may ultimately address this issue in more detail, those who argue that this high speed Internet access service provided to end users should be subject to section 251(c)(4) must show how, in light of the precedent described above, this is a "telecommunications service" being offered "at retail." "
Rep. Baird Introduces Bill to Fund Computer Security Research
11/16. Rep. Brian Baird (D-WA) introduced HR 3316, the Computer Security Enhancement and Research Act of 2001. He said that it "establishes a research and development program on computer and network security at the National Institute of Standards and Technology. It also strengthens the institute's existing responsibilities in developing best computer security practices and standards in assisting Federal agencies to implement effective computer and network security." See, Cong. Record, November 16, at pages H8331-2.
Rep. Baird stated that "Telecommunications and computer technologies are vulnerable to attack from far away by enemies who can remain anonymous, hidden in the vast maze of the Internet. Examples of systems that rely on computer networks include the electric power grid, rail networks, and financial transaction networks. Just as enemies are achieving a sophistication to use the most complex weapons against us, our vital computer networks have become more interconnected and more accessible and, therefore, more vulnerable via the Internet."
The House Science Committee, of which Rep. Baird is a member, held hearings on October 10 and 17 on cyber security. On October 17, Virginia Gov. James Gilmore recommended that "we need an entity to develop and implement a comprehensive plan for research, development, test and evaluation of processes to enhance cyber security in the same manner as we must do for other potential terrorist attacks. This is where our colleges and universities can have a dramatic impact not only in developing needed immediate capacity, but in training the next generation of "cyber soldiers" to protect our critical information systems and infrastructures." See, prepared testimony. Gov. Gilmore is also Chairman of the Advisory Panel to Assess the Capabilities for Domestic Response to Terrorism Involving Weapons of Mass Destruction, which is also known simply as the Gilmore Commission.
Rep. Baird provided further details about his proposal. "The research program is authorized for a 10 year period, growing from $25 million in the first year to $85 million in the fifth year. This may sound like a substantial amount of money, but the billions of dollars that are lost in successful computer attacks makes this paltry by comparison. Although the award would go to universities, the research projects may involve collaboration with for-profit companies that develop information security products."
The bill is cosponsored by Reps. Jim Matheson (D-UT), Mark Udall (D-CO), and Michael Honda (D-CA). It was referred to the House Science Committee.
Fed Circuit Rules in SSL v. Lockheed Martin Patent Case
11/13. The U.S. Court of Appeals (FedCir) issued its opinion in Space Systems / Loral v. Lockheed Martin, a patent infringement case involving the on sale bar.
Ford Aerospace & Communications Corp. (Ford), the predecessor of Space Systems / Loral (SSL), was the original assignee of U.S. Patent No. 4,537,375, titled "Method and apparatus for thruster transient control". This patent discloses an attitude control system for maintaining the position and orientation of a satellite. SSL filed a complaint in U.S. District Court (NDCal) against Lockheed Martin alleging patent infringement. The District Court ruled, on summary judgment, that the patent was invalid under the on sale bar.
35 U.S.C.  102(b) provides that "A person shall be entitled to a patent unless ... the invention was ... on sale in this country, more than one year prior to the date of the application for patent in the United States."
Prior to the patent application, Ford contracted with SociJtJ Nationale Industrielle Aerospatiale. Fred Chan, a Ford employee, and inventor of the patent, sent to Aerospatiale an engineering proposal, prior to the patent application, describing the system, including rough drawings, and an estimate of the cost of developing the system. The District Court held that Chan's proposal demonstrated conception of the invention, that the invention was ready for patenting upon conception, and that this proposal was an on sale event.
The Appeals Court reversed and remanded. It held that the District Court erred in ruling that the invention was ready for patenting upon conception as communicated in Chan's engineering proposal. It reasoned that for a complex technique, "wherein the inventor himself was uncertain whether it could be made to work, a bare conception that has not been enabled is not a completed invention ready for patenting." The Appeals Court did not reach the question of whether an offer of sale had been made.
More New Bills
11/15. Rep. Steny Hoyer (D-MD) introduced HR 3302, a bill to establish the Capitol Telephone Exchange Board. It was referred to the House Administration Committee.
11/15. Rep. Lindsey Graham (R-SC) and others introduced HR 3301, a bill to provide federal reimbursement to State and local governments for a limited 10 day sales, use, and retailers' occupation tax holiday. It was referred to the House Ways and Means Committee. See, Rep. Graham's release.
11/16. Rep. Robert Andrews (D-NJ) introduced HR 3313, a bill to protect small businesses from increased tariffs and other retaliatory actions taken by the U.S. during a trade dispute. It was referred to the House Ways and Means Committee.
Thanksgiving Schedule
The Tech Law Journal Daily E-Mail Alert will not be published on Thursday, November 22, or Friday, November 23.
House to Vote on Trade Promotion Authority Bill
11/16. Rep. Dick Armey (R-TX) announced that the House is scheduled to vote on HR 3005, the Bipartisan Trade Promotion Authority Act of 2001, on December 6, 2001. See, release. The House Ways and Means Committee passed the bill by a vote of 26 to 13 on October 9.
Trade promotion authority (TPA), which is also known as fast track, would give the President authority to negotiate trade agreements which can only be voted up or down, but not amended, by the Congress. TPA strengthens the bargaining position of the President, and the U.S. Trade Representative, in negotiations with other nations.
Technology companies that export equipment, software, or services, and that seek greater protection abroad for their intellectual property rights, stand to benefit from enactment of TPA.
Sen. Frank Murkowski (R-AK) said that "I am hopeful that the House will act on a bill to provide the President TPA this session, and that the Finance Committee will have the opportunity to mark-up that bill for a vote on the floor before we leave for the holidays." Cong. Record, November 15, pages S11933-4.
Sen. Max Baucus (R-MT) stated that "any new grant of fast track negotiating authority must address the concerns of Congress on issues like preservation of U.S. trade laws. It must also ensure that Congress has an active role in trade negotiations." Cong. Record, November 15, page S11899.
The protectionist Sen. Robert Byrd (D-WV) said that "we must not be asleep at the wheel as the one sided trade jalopy goes rumbling down the fast track". Cong. Record, November 16, page S11985.
The Friday, November 16, 2001 issue of the Tech Law Journal Daily E-Mail Alert (Alert No. 310), reported that "The Senate passed HR 1552, the Internet Nondiscrimination Act (INDA), without amendment, by a voice vote, on Thursday evening, November 15." In fact, the name of the bill is the Internet Tax Nondiscrimination Act. TLJ thanks readers who pointed out this error.
Monday, Nov 19
The House will meet at 2:00 PM. The Senate has recessed until November 27.
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, Washington DC.
Tuesday, Nov 20
The Senate will be in recess.
10:00 AM. The Commerce Department's Technology Administration will hold a public meeting on 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, September 10, 2001, Vol. 66, No. 175, at Pages 47016.
Wednesday, Nov 21
The Senate will be in recess.
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, November 2, 2001, Vol. 66, No. 213, at Pages 55702. Location: Room 130, NSF, 4201 Wilson Blvd., Arlington, VA.
Thursday, Nov 22
Thanksgiving day. Government offices will be closed. The Tech Law Journal Daily E-Mail Alert will not be published.
Friday, Nov 23
The Senate will be in recess.
The Tech Law Journal Daily E-Mail Alert will not be published
GAO Reports on IT at Federal Overseas Operations
11/16. The GAO released a report [PDF] titled "Information Technology: State Department Led Overseas Modernization Program Faces Management Challenges". It calls for more rigorous management controls.
The report states that the State Department "is in the early, formative phase of a long term plan to acquire and deploy a common knowledge management system for overseas based agencies engaged in foreign affairs activities. This system is to provide functionality ranging from basic Internet access and e-mail to mission critical policy formulation and crisis management support."
The report concludes that there is a need for more rigorous management controls, without which "it is unlikely that State and its agency partners will deliver needed operational system capabilities on time and within budget."
The 51 page report was prepared for Rep. Henry Hyde (R-IL), Chairman of the House Committee on International Relations.
Rep. Markey Opposes Microsoft Settlement
11/16. Rep. Ed Markey (D-MA), the ranking Democrat on the House Telecom Subcommittee, sent a letter [PDF] to Attorney General John Ashcroft complaining about the DOJ's and Microsoft's Proposed Final Judgment. He wrote that "I believe that the reported settlement agreed to by the Department represents a weakening in our government's commitment to a competitive marketplace and an abandonment of its responsibility to protect consumers."
Rep. Markey added that "The proposed settlement has a number of deficiencies, the most egregious of which is its failure to adequately address one of the central issues of contention in the antitrust case: Microsoft's illegal strategy of bundling so-called 'middleware' products, such as browsers, instant messaging software, and media players, into its monopoly Windows operating system." He also stated that "government officials seeking to correct a violation would have little recourse except to make a Federal case out of it. That's obviously a poor remedy in the fast paced technology sector."
The Microsoft settlement does not require any Congressional approval. Also, the House Telecom Subcommittee has no oversight authority over the DOJ.
More News
11/16. The House passed HR 3009, the Andean Trade Promotion and Drug Eradication Act, by a voice vote.
11/15. The House Judiciary Committee's Subcommittee on Immigration and Claims postponed its legislative hearing on HR 3231, a bill to replace the Immigration and Naturalization Service (INS) with the Agency for Immigration Affairs.
11/16. The U.S. Court of Appeals (DCCir) issued its opinion in Celtronix v. FCC, a petition for review of the FCC's 1997 grace period order regarding auction of Interactive Video and Data Service (IVDS) licenses. The Appeals Court affirmed the FCC order.
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