Tech Law Journal Daily E-Mail Alert
December 21, 2001, 9:00 AM ET, Alert No. 333.
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Senators Introduce Telework Tax Credit Bill
12/19. Sen. John Kerry (D-MA), Sen. Conrad Burns (R-MT), Sen. Jon Corzine (D-NJ), and Sen. Max Baucus (D-MT) introduced S 1856, the Teleworking Advancement Act. This bill would amend the Internal Revenue Code to provide tax credits to incent employer and employee participation in telework arrangements. The bill was referred to the Senate Finance Committee, of which Sen. Baucus is the Chairman.
Sen. Kerry addressed the bill in the Senate. He said that "millions of American workers participate in ``telework´´ arrangements, otherwise known as telecommuting, which allow them to work outside of their normal work location." He said that "Our legislation combines tax incentives and an employer awareness campaign to stimulate further growth in telework arrangements."
He elaborated that the bill would credit two tax credits. First, "The employer telework tax credit would allow employers to claim a credit of up to $500 for each employee who participates in an employer sponsored telework arrangement during the taxable year. For employees who telework on a partial basis, the credit would be prorated. Employees of small businesses, those with 100 or fewer employees, and disabled employees, as defined by the Americans with Disabilities Act, would be eligible for a maximum credit of $1,000."
Second, "The telework equipment tax credit would allow individuals or businesses to claim a credit equal to 10 percent of qualified telework expenses paid, pursuant to an employer sponsored telework arrangement. Either the employer or the employee, depending on who incurred the expense, would be eligible for the credit. The maximum credit would be $500. For employees of small businesses (those with 100 or fewer employees) and disabled employees, as defined by the Americans with Disabilities Act, the credit would be 20 percent of eligible expenses, with a maximum credit of $1,000. Qualified telework expenses includes expenses paid or incurred for computers, software, modems, telecommunications equipment, and access to Internet or broadband technologies, including applicable taxes and other expenses for the delivery, installation, or maintenance of such equipment."
See, Kerry statement in Congressional Record, December 19, 2001, at pages S13710-1.
People and Appointments
12/20. President Bush announced his intent to nominate Paul Atkins to be a Commissioner of the Securities and Exchange Commission (SEC), for the remainder of a five year term expiring on June 5, 2003. He is currently a partner in the Washington DC office of PWC. He was previously a partner in the Washington DC office of Coopers & Lybrand. Before that, he was an attorney, Counsel, Chief of Staff, and Counselor at the SEC. And before that, he was an associate at the law firm of Davis Polk & Wardwell. See, White House release.
12/20. President Bush announced his intent to nominate Cynthia Glassman to be a Commissioner of the Securities and Exchange Commission (SEC), for the remainder of a five year term expiring on June 5, 2006. She is currently a principal at Ernst & Young. Before that, she worked at Furash & Company. From 1977 through 1986 she worked at the Federal Reserve System in several positions, including Economist and Senior Economist.
12/20. The Association for Local Telecommunications Services (ALTS) announced changes to its Executive Committee. Roscoe Young, P/COO of KMC Telecom, will be the new Chairman. Dan Moffat, P/CEO of New Edge Networks, will be First Vice Chair. Robert Taylor, P/CEO of Focal Communications, will be Executive Vice Chair. See, ALTS release [PDF]. 
BellSouth Withdraws 271 Application in Georgia & Louisiana
12/20. BellSouth announced that it is withdrawing its applications with the FCC pursuant to Section 271 to provide long distance service in Georgia and Louisiana.
FCC Chairman Michael Powell released a statement in which he said that "The FCC cannot approve such applications by the Bell Companies unless they satisfy the requirements of section 271 of the Communications Act." He continued that "questions remain regarding whether BellSouth has satisfied the rigorous requirements of the statute and our precedents, including the adequacy of the company's operational support systems, the integrity of its performance data and its change management process, and related issues. We look forward to working with the company and with the Georgia and Louisiana utility commissions to provide them with any additional guidance they need to understand and satisfy the demanding requirements in this area."
Margaret Greene, President - Regulatory & External Affairs for BellSouth, stated that "When we asked the FCC in October for permission to sell long distance services in Georgia and Louisiana, we were armed with the unqualified endorsements of the Georgia and Louisiana public service commissions. We believed that we had built a very solid case that presented compelling evidence of BellSouth's compliance with the Telecommunications Act of 1996 ... We still believe this is true; however, we will comply with the FCC's request for additional information to supplement the record and believe that this will result in a timely and decisive approval."
Groups representing CLECs expressed approval of the withdrawal. Russell Frisby, President of CompTel, said in a release that "The FCC's request for BellSouth to provide additional information sends a clear message to the Bell companies that their business tactics to delay and block competitive carriers will not succeed." See also, ALTS release [PDF].
NIPC Warns of Vulnerability in Windows XP
12/20. The FBI's NIPC issued its Advisory 01-030, titled "Universal Plug and Play Vulnerabilities". It states that the "The NIPC is tracking what Microsoft refers to as a critical vulnerability in the universal plug and play (UPnP) service in Windows XP, Millennium Edition (ME), and Windows 98 or 98SE systems. This vulnerability could lead to denial of service attacks and system compromise.." See, Microsoft's page with information and patches. It states that "Microsoft strongly urges all Windows XP customers to apply the patch immediately." See also, eEye Digital Security release.
Second Circuit Affirms in Sprint v. Connecticut Siting Council
12/17. The U.S. Court of Appeals (2ndCir) issued its opinion in Sprint Spectrum v. Connecticut Siting Council, affirming the judgment of the U.S. District Court (DConn) which declared that the Connecticut Siting Council (CSC) erred when it interpreted the provisions of Connecticut General Statutes § 16-50i(a)(6) to exclude from its jurisdiction the telecommunications towers and associated equipment used in Sprint's PCS systems and that CSC did have such jurisdiction, and ordering CSC to accept, process and act upon requests for authority to construct such telecommunications towers and associated equipment in the same manner as other applicants in its jurisdiction.
Congress Adjourns
12/20. The House and Senate passed HConRes 295, a resolution providing for the sine die adjournment of the first session of the 107th Congress. The House and Senate are scheduled to reconvene for the second session in late January.
Before adjourning, the House passed the economic stimulus bill by a vote of 224 to 193 during an all night session that stretched into December 20. See, Roll Call No. 509. However, Senate Majority Leader Tom Daschle (D-SD) prevented it from coming to a vote in the Senate. This bill, HR 3529, is named the Economic Security and Worker Assistance Act.
Nor did the Congress pass legislation implementing the NextWave settlement agreement before adjourning. The agreement requires passage of legislation by December 31, 2001.
The adjournment also leaves pending many other tech related bills, including the Tauzin Dingell bill, and bills pertaining to spam, tax credits for broadband deployment, distance learning, Internet gambling, and trade promotion authority.
Xerox v. Palm
12/20. The U.S. District Court (WDNY) ruled that Palm's Graffiti handwriting technology for hand held computers infringes a Xerox patent. Palm promptly announced that it will appeal.
Xerox is the assignee of U.S. Patent No. 5,596,656, which is titled "Unistrokes for Computerized Interpretation of Handwriting." Xerox filed a complaint in federal Court in Rochester, New York, against 3Com Corporation, U.S. Robotics Corporation, U.S. Robotics Access Corporation, and Palm Computing, Inc. claiming that the Graffiti software in its PalmPilot line of hand held computers infringed its unistrokes patent.
Eric Benhamou, Ch/CEO of Palm, said in a release that "We assert that the Graffiti handwriting technology does not infringe the Xerox patent and that Palm has strong arguments to support its defense ... Palm will defend itself vigorously and does not intend for this litigation to affect its business strategy or business model nor that of its licensees."
Federal Circuit Affirms in Interactive Pictures v. Infinite
12/20. The U.S. Court of Appeals (FedCir) issued its opinion in Interactive Pictures v. Infinite Pictures, a patent infringement case. Interactive Pictures is the holder of U.S. Patent 5,185,667, titled "Omniview motionless camera orientation system". It filed a complaint in U.S. District Court (EDTenn) against Infinite Pictures (formerly known as Omniview) alleging patent infringement, based on the doctrine of equivalents. Infinite asserted invalidity. The trial jury found the patent infringed, and not invalid. It awarded $1 Million in damages. The Appeals Court affirmed. 
US Imposes Tariffs on Ukraine for Failure to Protect IPR
12/20. The Office of the U.S. Trade Representative (USTR) announced that the U.S. is imposing tariffs on certain goods from the Ukraine as a result of the Ukraine's failure to enact legislation to crack down on sound recording and optical media piracy.
USTR Robert Zoellick stated in a release that "The United States is moving forcefully to protect its rights. We've worked with Ukraine over the past two years to avoid enacting sanctions. We hope Ukraine will now redouble its efforts to deal with intellectual property rights piracy and pass the legislation needed to allow us to lift sanctions".
The Recording Industry Association of America (RIAA) and the International Intellectual Property Alliance (IIPA) both praised the decision. RIAA EVP Neil Turkewitz said in a release that "Ukraine has been one of the world's leading producers of pirate CDs, and its failure to effectively address the situation will essentially foreclose its present efforts to accede to the WTO. Today's action by the Rada in rejecting legislation supported by President Kuchma and the world trading community will have dramatic implications on Ukrainian society at every level -- economic, political and cultural."
Eric Schwartz, Counsel to the IIPA, stated in a release [PDF] that: "It is disappointing that bilateral trade relations between the United States and Ukraine have been reduced to trade sanctions and the removal of trade benefits when we should instead be working to open markets and improve our trade relations. But today’s action is the result of Ukraine’s failure to take appropriate steps against illegal production of materials in Ukraine that it pledged it would undertake over 18 months ago. In fact, this is the culmination of several years of unsuccessful efforts by the U.S. and European public and private sectors to get the government of Ukraine to take the proper steps to take some control over unchecked optical media piracy."
EU US Reach Music Copyright Agreement
12/19. The EU issued a release in which it stated that "The European Union and the United States today agreed on a temporary solution of their dispute over music copyright. The dispute was over the way in which smaller bars, shops and restaurants in the US have hitherto played music without paying royalties. Today's agreement came during a meeting between EU Trade Commissioner Pascal Lamy and his counterpart, US Trade Representative Robert Zoellick. A World Trade Organisation disputes procedure last year found in favour of the EU. ... However, the US is still obliged to bring its legislation into line with its WTO obligations."
EU Trade Commissioner Pascal Lamy stated in the release that "We have agreed on a process that will result in a US financial contribution to support projects and activities for the benefit of European music creators ... This is a good example of how we can manage our problems in a co-operative manner, while keeping in mind our international obligations and commitments."
WTO DG Moore Releases Year End Message
12/20. World Trade Organization (WTO) Director General Mike Moore released a year end message in which he reviewed WTO accomplishments of 2001, and listed some goals for 2002.
He wrote that "This has been an outstanding year for the World Trade Organization, perhaps the most significant in our brief history. We have concluded a successful Ministerial Conference in Doha, Qatar and, as USTR Bob Zoellick said, '... removed the stain of Seattle'." He added that "we have welcomed more than a quarter of the world's population into our membership from Lithuania, Moldova, China and Chinese Taipei."
He also wrote that "We are already planning a major Symposium in May next year which will address the concerns expressed by some Ministers at Doha on our relations with the public." He stated that one suggestion for the agenda is the "impact of technology and the digital divide".
Commissioner Copps Opposes Liquor Ads
12/20. FCC Commissioner Michael Copps released a statement regarding NBC's decision to carry liquor ads. He stated that "A race to the bottom is never pretty to watch, whether it's a network saying that it has to show liquor ads in prime time because they are running on cable, or whether it's a network pushing the limits on indecency because it says it has to compete against prurient shows on another network. Apart from the question of whether these ads are or are not a matter for regulation, this is most certainly an area where we could use some sense of social responsibility, some understanding of what is being foisted on our children, and some vision to reach for the stars instead of plumbing the depths."
See also, December 20 statement by Rep. Ed Markey (D-MA), the ranking Democrat on the House Telecom Subcommittee.
Christmas Schedule
The Tech Law Journal Daily E-Mail Alert will not be published on Monday, December 24, Tuesday, December 25, or Wednesday, December 26.
Friday, Dec 21
8:30 AM. Federal Trade Commission (FTC) Chairman Timothy Muris will speak at the Brookings Institute roundtable titled "Trade and Investment Policy." Location: Brookings Institute, Falk Auditorium, 1775 Massachusetts Avenue, NW, Washington DC.
Monday, Dec 24
The FCC will be closed.
The USPTO will be closed. Any any action or fee due Saturday, December 22, Sunday, December 23, Monday, December 24, or Tuesday, December 25, will be considered as timely on Wednesday, December 26, 2001. See, USPTO release.
Senate to Hold Hearing on Comcast AT&T Broadband and EchoStar DirecTV Mergers
12/20. Sen. Herb Kohl (D-WI) and Sen. Mike DeWine (R-OH), the Chairman and ranking Republican on the Senate Judiciary Committee's Subcommittee on Antitrust, Business Rights & Competition, jointly announced that their Subcommittee will hold a hearing on the proposed mergers of Comcast and AT&T Broadband, and EchoStar and DirecTV.
The two issued a release in which they stated that "The deal between AT&T and Comcast, already the nation's largest and third largest cable companies, would create a cable giant with over 21 million subscribers. We have serious concerns about the impact that such consolidation will have on consumers, especially given the increasing level of concentration in the entire media industry. Consumers already face rising cable bills, and we fear that further concentration in this industry may only heighten this trend. We continue to believe that more competition, rather than additional consolidation, is needed in this industry. We recognize, however, that this deal does have the potential to bring cable telephony to a far greater number of consumers, therefore bringing important and needed competition to the local telephone market."
They added that "We anticipate holding a hearing on this proposed merger early next year within the context of consolidation in the subscription television market, including a review of the proposed Echostar DirecTV deal."
The National Association of Broadcasters (NAB), which opposes the EchoStar DirecTV merger, issued a release in which it states that it commissioned a public opinion poll, and that it concluded therefrom that a majority of respondents want the government to block the deal. The NAB stated that respondents were asked whether they agree with the following: "Television providers are too important to allow the elimination of competition. The federal government should not allow the only two satellite television companies to merge into just one."
Robert Sachs, P/CEO of the NCTA, said in a statement that "The AT&T Broadband/ Comcast merger brings together two of the top management teams in the cable business and positions the companies well to compete with phone giants the likes of SBC and Verizon, and the proposed EchoStar/ DirecTV direct broadcast satellite powerhouse. Consumers will be the beneficiaries of vigorous competition between the cable, telephone and satellite industries."
FTC Seeks Comment on Use of Disgorgement as Remedy
12/20. The FTC announced that it is seeking public comments on the use of disgorgement as a remedy for competition violations, including those involving the Hart Scott Rodino (HSR) Premerger Notification Act, FTC Act, and Clayton Act. See, notice to be published in the Federal Register. Comments are due by March 1, 2002.
Computer and Internet Crimes
Auction Fraud and Threatening E-Mail. 12/18. A grand jury of the U.S. District Court (NDCal) returned an indictment against Herbert Derungs in connection with allegations that he auctioned over eBay baseball bats that he falsely claimed had belonged to Derek Jeter of the New York Yankees and Nomar Garciaparra of the Boston Red Sox. The indictment charges fraud by wire and three counts of mail fraud, in violation of 18 U.S.C. §§ 1343 and 1341. See, USAO release. The indictment also charges one count of utilizing a telecommunications device in interstate communications with intent to threaten and harass, in violation of 47 U.S.C. § 223(a)(1)(C). This section provides that "Whoever, ... makes a telephone call or utilizes a telecommunications device, whether or not conversation or communication ensues, without disclosing his identity and with intent to annoy, abuse, threaten, or harass any person at the called number or who receives the communications." The indictment states that Derungs sent a threatening e-mail.
Unauthorized Access. 12/17. The USAO for the Southern District of California announced the arrest of Stephen Suplita. A grand jury of the U.S. District Court (SDCal) returned an indictment against Suplita on December 14, 2001, charging that he used his computer to gain unauthorized access to Inc.'s computer system, and that he intentionally caused damage to the computer system. See, USAO release.
PACER Hacking. 12/18. Nicholas Mamich plead guilty in U.S. District Court (DDC) to one felony count of fraud in connection with computers, in violation 18 U.S.C. § 1030(a)(2)(B). Mamich hacked into the the Public Access to Court Electronic Records (PACER) computer system operated by the Administrative Office of the United States Courts. PACER maintains docket information, electronically stored case related documents, case statistic reports, and other related information. Specifically, Mamich devised a program that placed hidden files on the PACER servers which bypassed the PACER billing program, so that no charges would accrue to him for downloading files. See, CCIPS release.
Trafficking in Counterfeit Goods on the Internet. 12/17. Mark Dipadova was sentenced in U.S. District Court (DSCar) to trafficking in counterfeit goods in violation of 18 U.S.C. § 2320. He operated a web site that sold counterfeit luxury items such as Rolex and Cartier watches. He received 24 months in prison, and was ordered to pay $138,264.85 in restitution to the owners of the trademarks that he infringed. Strom Thurmond Jr. is the USA for South Carolina. See, CCIPS release.
More News
12/20. Verizon filed an application with the FCC to provide in region interLATA service in New Jersey pursuant to 47 U.S.C. § 271. See, Verizon release.
12/19. Sen. George Allen (R-VA) and Sen. John Kerry (D-MA) introduced S 1858, a bill to permit the closed circuit televising of the criminal trial of Zacarias Moussaoui for the victims of September 11th. The bill was referred to the Senate Judiciary Committee.
12/19. December 19 was the deadline to submit comments to the National Telecommunications and Information Administration (NTIA) in response to its Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications. See, notice in Federal Register. The NTIA has been publishing these comments in its web site. See, index of comments, with hyperlinks.
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