Tech Law Journal Daily E-Mail Alert
February 11, 2002, 9:00 AM ET, Alert No. 365.
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Bush Advocates Passage of Trade Promotion Authority Bill
2/8. President Bush gave a speech to the Cattle Industry Annual Convention and Trade Show in Denver, Colorado, in which he advocated legislation granting the President trade promotion authority.
Trade promotion authority, which is also known as fast track, would give the President authority to negotiate trade agreements that could only be approved or rejected, but not amended, by the Congress. The House passed its version of the bill, HR 3005, on December 6, 2001. The Senate Finance Committee has approved a Senate version of the bill.
Bush stated that "We want to open up markets, and at the same time, we want to make sure others open up their markets for us". He added that "You can help by making sure the Senate hears that message, that the Senate passes a trade promotion bill which gives me the authority to work hard to open up markets all around the world for those who work hard. I need that authority. It's good for America to have that authority."
Treasury Official Condemns Proposed EU E-Commerce Taxes
2/8. Kenneth Dam, Deputy Treasury Secretary, released a statement explaining and condemning the European Union's (EU) proposed value added tax (VAT) on e-commerce goods and services. He stated that "The Administration has serious concerns about a European Union proposal to apply value added taxes (VAT) to imports of certain e-commerce goods and services."
Dam summarized the EU proposal: "U.S. sellers of goods or services digitally delivered to EU consumers may soon be required to register in the EU and charge EU VAT, at the VAT rate that applies in the consumer's country of residence. Conversely, EU companies that sell digitally delivered products to EU consumers would continue to charge VAT at the rate applicable in the companies' country of establishment, regardless of where in the EU the consumer is resident."
This, wrote Dam, means that "U.S. sellers may be required to charge VAT on sales to an EU consumer at a rate higher than their EU competitors would charge on sales of the same product to the same consumer."
Dam also stated that "Furthermore, EU VAT on digitally delivered products may be imposed at a rate higher than on physically delivered equivalents. For example, in many EU countries, the VAT rate applied to sales of digitally delivered books, newspapers and magazines may be higher than that applied to sales of the same books, newspapers and magazines sold in physical form."
Dam asserted in conclusion that the EU proposal "may potentially be inconsistent with international trade obligations in the World Trade Organization, in particular the commitment to accord national treatment to foreign goods and services." He did not state what actions the U.S. might take, if any, other than to "continue to work with the EU".
USTR to Contest Sanctions in WTO FSC Tax Matter
2/8. The Office of the U.S. Trade Representative (USTR) announced that it filed a submission with the World Trade Organization (WTO) stating that the U.S. would challenge the amount of trade sanctions claimed by the European Union in the Foreign Sales Corporation (FSC) dispute. See, USTR release.
Trade Hearings
2/7. The House Ways and Means Committee held a hearing on trade negotiations. See, prepared testimony of USTR Robert Zoellick. See also, prepared statements of members of the Committee: Rep. Bill Thomas (R-CA), Rep. Charles Rangel (D-NY), Rep. Sander Levin (D-MI), and Rep. Jim Ramstad (D-MN).
2/6. The Senate Finance Committee held a hearing on trade negotiations. See, prepared testimony [PDF] of USTR Robert Zoellick. See also, prepared testimony [PDF] of other witnesses: George Scalise (President of the Semiconductor Industry Association), Gary Broyles (Nat. Assoc. of Wheatgrowers), Arthur Wainwright (National Association of Manufacturers), Barb Determan (National Pork Producers Council). See also, opening statement of Sen. Max Baucus (D-MT) and opening statement of Sen. Charles Grassley (R-IA).
OCC Closes Internet Bank
1/7. The Office of the Comptroller of the Currency (OCC) closed NextBank, an Internet bank with no branch operations that marketed credit cards over the Internet. The Federal Deposit Insurance Corporation (FDIC) was appointed receiver. The OCC, which charters, regulates and examines national banks, stated in a release that it found that NextBank "was operating in an unsafe and unsound manner and had experienced a substantial dissipation of assets and earnings through unsafe and unsound practices."
People and Appointments
2/4. Michael Yoshii joined the Tokyo office of the law firm of Latham & Watkins as a partner. He previously worked for the law firm of White & Case. He focuses on venture capital and technology transactions. See, LW release.
2/8. The law firm of Perkins Coie announced promotions to partner and of counsel, including the following: Elizabeth Woodcock was named partner in the Denver office. Her practice includes telecommunications law. Garrett Tuttle was named of counsel in the Denver office. His practice includes intellectual property law with a focus on trademarks. Neil Nathanson was named partner in the Portland office. He focuses on corporate finance and securities law, mergers and acquisitions and computer and Internet law. Mei Yin Lim was named of counsel in the Hong Kong office. She focuses on international business transactions including PRC investment in manufacturing, service and infrastructure projects, intellectual property right counseling, prosecution and enforcement, franchising and distribution, and corporate structuring, mergers and acquisitions. Donald Walther was named partner in the Seattle office. His practice includes intellectual property enforcement, antitrust, and other litigation areas. John Clark was named of counsel in the Washington DC office. His practice includes telecommunications law, with emphasis on historic preservation law. Mark Wasden was named of counsel in the Washington DC office. His practice includes international trade, including matters involving customs, export control and antidumping. See, PC release.
2/6. Gregory Gundlach, a professor of marketing at the University of Notre Dame, was named a Senior Research Fellow of the American Antitrust Institute.
More News
2/7. Rep. David Dreier (R-CA), Chairman of the House Rules Committee, announced that the deadline for Members to offer amendments to HR 1542, the Tauzin Dingell bill, is 4:00 PM on Monday, February 25. See, Cong. Rec., Feb. 7, 2002, at H217.
2/7. The National Cyber Security Alliance (NCSA) launched a web site name Stay Safe Online that encourages PC users to undertake security measures to protect home and small business computer systems and networks. It advocates the use of firewalls and anti virus software, regular installation of patches, and not opening e-mail from unknown sources. The NCSA's membership includes the Critical Information Assurance Office (CIAO), the Federal Trade Commission (FTC), other government entities, the Information Technology Association of America (ITAA), the U.S. Chamber of Commerce, other groups, and technology and phone companies. "A key part of homeland defense is protecting every computer including home users and small business. ... Citizens don't realize how much damage can be done by people using your computers remotely without your knowing it. This campaign will enlighten and empower consumers to take action," said Dick Clarke, Special Advisor to the President for Cyberspace Security, in a release. See also, Cisco release, ITAA release, and Chamber release.
2/8. Federal Reserve Board Governor Mark Olson gave a speech titled "Implementing the Gramm Leach Bliley Act: Two Years Later" to the American Law Institute and American Bar Association in Washington DC.
2/8. February 8, 2002 was the 6th anniversary of former President Clinton's signing of the Telecommunications Act of 1996.
Spectrum Rebel Loses First Amendment Appeal
2/8. The U.S. Court of Appeals (DCCir) issued its opinion in Grid Radio v. FCC, a case involving an FM radio broadcaster who operated without an FCC license. The Appeals Court affirmed the FCC's cease and desist order, and fine, over a First Amendment challenge.
Background. Jerry Szoka operated Grid Radio, an unlicensed low power FM radio station in Cleveland, Ohio. He neither sought nor obtained a license from the Federal Communications Commission (FCC), as required by 47 U.S.C. § 301. The FCC ordered him to stop broadcasting. He argued, among other things, that the FCC violated his First Amendment rights. The Supreme Court has long since upheld the FCC's power to regulate broadcast speech. See, National Broadcasting Company v. United States, 319 U.S. 190 (1943) and Red Lion v. FCC, 395 U.S. 367 (1969).
Appeals Court Holding. A three judge panel of the Court of Appeals held that the FCC's cease and desist order did not violate the First Amendment, citing the Red Lion case. Judge David Tatel, writing for the Court, acknowledged briefly that the Supreme Court might some day revisit the scarcity rational for broadcast regulation. However, he added that "Absent clear congressional or judicial signals that the micro broadcasting ban was unlawful, or unequivocal evidence that Grid Radio's circumstances warranted differential application of the ban, we think the Commission could continue to enforce the ban and the chaos averting licensing regime." Judge Tatel did not specify what standard of review he applied in this case.
However, while the Court of Appeals rejected Szoka's First Amendment challenge to the spectrum licensing regime, the Court of Appeals, in a companion case, Ruggiero v. FCC, held unconstitutional the much more limited ban on former pirate broadcasters obtaining a low power FM license. The Ruggiero opinion (see following story) offers an analysis of First Amendment protections in the context of FCC regulation of speech that contains more length, but perhaps, not more clarity.
Appeals Court Overturns Ban on Licensing Former Pirate Broadcasters
2/8. The U.S. Court of Appeals (DCCir) issued its opinion in Ruggiero v. FCC, another case involving unlicensed broadcasting. The Appeals Court held unconstitutional the ban on issuance of low power FM radio broadcast licenses to anyone who has previously engaged in an unlicensed operation.
Background. The Radio Broadcasting Preservation Act of 2000 (RBPA) permanently prohibits anyone who ever "engaged in any manner in the unlicensed operation of any station in violation of ... the Communications Act of 1934" from obtaining a low power FM radio license from the Federal Communications Commission (FCC). Greg Ruggiero is a former pirate broadcaster who later sought a low power FM license from the FCC. He argues that the statute and the FCC's implementing rules violate his First and Fifth Amendment rights.
Standard of Review. The Appeals Court reviewed precedent, including FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775 (1978), FCC v. League of Women Voters, 468 U.S. 364 (1984), and News America Publishing v. FCC, 844 F.2d 800 (D.C. Cir. 1988), and then concluded that it need not identify the standard of review to be applied. It wrote that "we find ourselves in a middle ground, sure only that the appropriate standard is neither NCCB's minimal scrutiny nor League of Women Voters' intermediate scrutiny."
Holding. Nevertheless, the Court held that the ban was constitutionally impermissible because of the relationship of the ban to the underlying purpose of the statute and implementing regulations. It found that the class of applicants banned from receiving low power FM licenses is under inclusive. It wrote, citing News America, that "we find the character qualification provision so poorly aimed at maximizing future compliance with broadcast laws and regulations as to ``raise[ ] a suspicion´´ that perhaps Congress's ``true´´ objective was not to increase regulatory compliance, but to penalize micro broadcasters' ``message.´´ "
The Court concluded that "we cannot sanction an automatic and permanent restriction on unlicensed broadcasters' future lawful speech without understanding why their misdeeds warrant a penalty so much more severe than that applied to any other misconduct. Yet neither the RBPA itself, nor the legislative history, nor the record in this case provides a satisfactory explanation. We thus have no choice but to declare the statute and the Commission's implementing regulation unconstitutional."
Dissent. Judge Tatel wrote the opinion for a three judge panel. Judge Rogers joined. Judge Karen Henderson wrote a dissent. She wrote: "What could be more reasonable or logical than to suspect that those who ignored the Commission's LPFM broadcast regulations in the past are likely to do so in the future and therefore to head them off. ... I see no reason the legislature cannot permissibly tackle a single part of a perceived problem (including one touching on the First Amendment) through a statute, such as the one here, which is neither overinclusive nor underinclusive."
NTIA Director Addresses Broadband
2/8. Nancy Victory, Director of the National Telecommunications and Information Administration (NTIA), gave a speech titled "Creation of a Broadband Universe: A Big Band Theory" at the Alliance for Public Technology Broadband Symposium in Washington DC. She repeated themes from earlier speeches, and reiterated that the Bush administration is not yet ready to announce a broadband policy.
She stated that "regulators are searching for the right regulatory mix or Big Bang to provide the foundation for the broadband universe. Though possibly only slightly less challenging than the scientists' job, our task is no less important because our work can propel broadband deployment, if we get it right, or postpone it, if we don't. We're still completing our research, and aren't yet prepared to announce the Administration's views on the government's role in ensuring that the entire nation benefits from broadband's ``big bang.´´ "
She listed several vague guidelines. She stated that "the market, not government, should drive broadband's roll-out. Government's role is to remove the regulatory roadblocks that impede efficient capital investment." However, she qualified this by adding that "the market might not always work as well or at the same pace in all areas, particularly in rural and certain urban areas."
She stated that "Facilities based competition has always been a desired means," but added that "there should be reasonable opportunities for resale competition as well".
Internet Securities Fraud
2/5. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (CDCal) against Alexander Naujoks and others alleging violation of federal securities laws in connection with misrepresentations regarding purported businesses that provide an online reservation system and an online competitive sports league.
The complaint alleges that Naujoks and companies that he created are selling stock in "purported online business operations" through cold calling and a web site, and in so doing, have made numerous material misrepresentations, in violation of the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, 15 U.S.C. §§ 77e(a) & 77e(c), and the antifraud provisions of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), and Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5. See also, SEC release.
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Bush Picks Adelstein for FCC Commissioner
2/8. President Bush announced his intent to nominate Jonathan Adelstein to be a Commissioner of the Federal Communications Commission (FCC) for the remainder of a five year term expiring June 30, 2003. That Bush would nominate Adelstein has been previously reported. He will be nominated for the position left vacant by the retirement of Gloria Tristani.
Adelstein has been a Legislative Assistant for Sen. Tom Daschle (D-SD) since 1995. Before that, he worked for former Sen. David Pryor (D-AR). And before that, he was a Legislative Assistant to former Sen. David Riegle (D-MI). See, White House release.
Monday, Feb 11
The House will not be in session.
The Senate will convene at 2:00 PM for morning business. At 3:00 PM, the Senate will resume consideration of S 1731, the farm bill. At 5:45 PM, the Senate will consider the nominations of Michael Melloy to be U.S. Circuit Judge for the 8th Circuit and Jay Zainey to be U.S. District Judge.
Tuesday, Feb 12
The House will meet at 12:30 PM for morning hour and 2:00 PM for legislative business. The House will consider a number of bills under suspension of the rules. At 5:30 PM the House will consider HRes 344, a rule for consideration of HR 2356, the campaign finance bill.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in WorldCom v. FCC, No. 01-1218. Judges Tatel, Garland and Williams will preside.
9:30 AM. The Senate Governmental Affairs Committee's Subcommittee on International Security, Proliferation and Federal Services will hold a hearing to examine multilateral non-proliferation regimes, weapons of mass destruction technologies, and the war on terrorism. Location: Room 342, Dirksen Building.
10:00 AM. The Senate Banking Committee will hold a hearing on accounting and investor protection issues surrounding the problems with Enron and other public companies. The witnesses will be five former Chairmen of the SEC, Roderick Hills, Harold Williams, David Ruder, Richard Breeden, and Arthur Levitt. Location: Room 538, Dirksen Building.
11:00 AM. The FTC will announce a "three point program to crack down on deceptive spam." FTC Chairman Timothy Muris will speak. See, FTC release. Location: FTC Internet Lab, Room 279, 600 Pennsylvania Ave., NW.
12:15 PM. The FCBA's Common Carrier Committee will host a brown bag lunch. Kathleen Abernathy (FCC Commissioner) and Nanette Thompson (Chair of the Regulatory Commission of Alaska) will speak about universal service. RSVP to Rhe Brighthaupt at rbrighth Location: Wiley Rein & Fielding, 1750 K St., NW, 10th Floor.
12:15 PM. The FCBA's Transactional Practice Brown Committee will host a brown bag lunch on wireless transactions. RSVP to Tina Screven at 202 383-3337. Location: Wilkinson Barker & Knauer, 2300 N Street NW.
2:30 PM. The Senate Foreign Relations Committee will hold a hearing to examine the theft of American intellectual property at home and abroad. Location: Room 419, Dirksen Building.
4:00 PM. The House Judiciary Committee's Crime Subcommittee will hold a hearing on HR 3482, the "Cyber Security Enhancement Act of 2001", sponsored by Rep. Lamar Smith (R-TX). Location: Room 2237, Rayburn Building.
Wednesday, Feb 13
The House will likely begin its consideration of HR 2356, the campaign finance bill.
Day one of a three day conference titled Biometric Consortium Conference. The sponsors include the Information Technology Laboratory (ITL) and the Advanced Technology Program (ATP) of the National Institute of Standards and Technology (NIST), the National Security Agency (NSA), the Department of Defense's Biometric Management Office (BMO), the General Services Administration (GSA), and the Federal Technology Service (FTS) Center for Smart Card Solutions. This conference has been rescheduled from September 12-14, 2001. See, conference web site. Location: Hyatt Regency Crystal City, Arlington, VA.
10:00 AM - 12:00 NOON. The House Science Committee will hold a hearing titled "R&D Budget for Fiscal Year 2003: An Evaluation". Location: Room 2318, Rayburn Building.
11:00 AM. The Cato Institute will host a panel discussion titled "Trade War or Tax Reform? The WTO Ruling on Tax Breaks for U.S. Exporters". The panelists will be Rep. Phil Crane (R-IL), Chairman of the Trade Subcommittee of the House Ways and Means Committee, William Reinsch, National Foreign Trade Council, John Meagher, Price Waterhouse Coopers, and Chris Edwards, Cato. Cato will web cast the event. A luncheon will follow the program. See, Cato event summary. Location: Cato, 1000 Massachusetts Ave., NW.
2:00 PM. The Senate Judiciary Committee's Administrative Oversight and the Courts Subcommittee will hold a hearing titled "Administrative Oversight: Are We Ready For A Cyber Terror Attack?". Sen. Charles Schumer (D-NY) will preside. Location: Room 226, Dirksen Building.
5:00 - 7:00 PM. The Congressional Internet Caucus Advisory Committee will host an event titled "Reception and Technology Fair". Each of the Co-chairs of the Internet Caucus, Sen. Patrick Leahy (D-VT), Sen. Conrad Burns (R-MT), Rep. Bob Goodlatte (R-VA) and Rep. Rick Boucher (D-VA), is likely to speak. The Co-chairs of the Wireless Task Force, Sen. John Ensign (R-NV) and Rep. Mike Honda (D-CA), are likely to speak also. Location: Room 902, Hart Building.
Thursday, Feb 14
The House will likely continue its consideration of HR 2356, the campaign finance bill.
Day two of a three day conference titled Biometric Consortium Conference.  See, conference web site. Location: Hyatt Regency Crystal City, Arlington, VA.
The Forum on Technology and Innovation (Tech Forum) will hold a event relating to cyber security. The speakers will be Richard Clarke (Special Advisor to the President for Cyberspace Security), Vint Cerf (WorldCom), and Bruce Schneier (CTO of Counterpane Internet Security). The Tech Forum was founded by Sen. Bill Frist (R-TN), Sen. Jay Rockefeller (D-WV), and the Council on Competitiveness.
9:30 AM. The FCC will hold a meeting. See, FCC release and agenda at right. Location: Commission Meeting Room, Room TW-C305, 445 12th St., SW.
10:00 AM. The House Judiciary Committee's Subcommittee on Courts, Internet and Intellectual Property will hold a hearing on the "Federal Trademark Dilution Act." Location: Room 2141, Rayburn Building.
2:30 PM. The Senate Judiciary Committee's Technology, Terrorism, and Government Information Subcommittee will hold a hearing on privacy, identity theft, and protection of personal information. Sen. Dianne Feinstein (D-CA) will preside. Location: Room 226, Dirksen Building.
Friday, Feb 15
The House will not be in session.
Day three of a three day conference titled Biometric Consortium Conference. See, conference web site. Location: Hyatt Regency Crystal City, Arlington, VA.
8:00 AM - 2:00 PM. The National Science Foundation's (NSF's) Advisory Committee for Cyberinfrastructure will hold an open meeting. See, notice in Federal Register. Location: Room 1150, NSF, 4201 Wilson Blvd., Arlington, VA.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in New World Radio v. FCC, No. 1110. Judges Henderson, Randolph and Rogers will preside.
12:00 NOON. Deadline to submit comments to the Office of the U.S. Trade Representative (USTR) regarding foreign countries that deny adequate and effective protection of intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. The USTR requests comments pursuant to its duties under § 182 of the Trade Act of 1974, 19 U.S.C. § 2242, which is better known as the "Special 301" provisions. See, notice in the Federal Register.
Extended deadline to file reply comments with the FCC in its proceeding regarding cross ownership of broadcast stations and newspapers. This is MM Docket No. 01-235. See, notice in Federal Register.