|House Crime Subcommittee
Postpones Mark Up of Cyber Security Bill
|2/14. The House
Judiciary Committee's Crime Subcommittee met to mark up HR 3482,
the "Cyber Security Enhancement Act of 2001",
sponsored by Rep.
Lamar Smith (R-TX). However, a quorum was lacking, so the
mark up was postponed. Rep. Smith, who is also the Chairman of
the Subcommittee, stated at the hearing that he hoped to mark
up the bill after the House returns from its one week recess
Rep. Smith has prepared an amendment
in the nature of a substitute that contains additional
provisions. However, since the meeting was postponed, this
amendment has not yet been offered or approved.
The amendment includes a new Section 108 regarding emergency
use of pen registers and trap and trace (PRTT) devices.
Currently, under 18 U.S.C. § 3125, law enforcement
authorities may use PRTT devices for 48 hours in certain
emergency situations, while court authority is being sought.
Section 108 would expand the list of situations to include
"an immediate threat to a national security
interest" and "an ongoing attack on a protected
computer that constitutes a crime punishable by a term of
imprisonment greater than one year".
The amendment also contains a new section 109 that would raise
penalties for illegally intercepting cell phone conversations,
and increase penalties for unlawful access to stored
The amendment leaves Section 102 of the bill unchanged. This
section would amend 18
U.S.C. § 2702(b), regarding voluntary disclosure of the
contents of communications. Currently, the statute provides
that "A person or entity may divulge the contents of a
communication ... (6) to a law enforcement agency ... (C) if
the provider reasonably believes that an emergency involving
immediate danger of death or serious physical injury to any
person requires disclosure of the information without
delay." The bill would allow the disclosure "if the
provider, in good faith, believes ..."
Alan Davidson of the Center for
Democracy and Technology (CDT) testified against this
language at the Subcommittee's hearing on February 12. He also
spoke with reporters after the February 14 meeting. He stated
Section 102 would create a "a loophole that you can drive
a truck through".
Rep. Bob Goodlatte
(R-VA) also spoke with reporters after the meeting. He would
like the language of his ISP immunity bill, HR 3716,
to be added as a further amendment to HR 3482. He stated that
he would not have offered it as an amendment at the February
14 meeting. However, he added that "we are still
discussing that with the committee". Rep. Goodlatte's
bill, titled the "Online Criminal Liability
Standardization Act of 2002", would exempt ISPs from
criminal liability for third party content stored on their
It provides that "no interactive computer service
provider, or corporate officer of such provider, shall be
liable for an offense against the United States arising from
such provider’s transmitting, storing, distributing, or
otherwise making available, in the ordinary course of its
business activities as an interactive computer service
provider, material provided by another person." The bill
further provides that "The liability limitation created
by this section does not apply if the defendant intended that
the service be used in the commission of the offense."
|FTC Brings COPPA Action
|2/14. The Federal Trade
Commission (FTC) announced that it filed a complaint
in U.S. District Court (NDIowa)
against American Pop Corn Company (APC) alleging violation of
the Children's Online Privacy Protection Act of 1998 (COPPA),
and the FTC's Children’s Online Privacy Protection Rule, for
collecting personal information from children through its web
site, without first obtaining parental consent. The FTC and
APC also settled the case, and filed a proposed consent
decree [PDF]. Under the terms of the settlement, APC will
pay a $10,000 fine, and be enjoined from further violations of
the COPPA. This is the fifth civil action filed by the FTC to
enforce the COPPA.
|House Subcommittee Holds
Hearing on Federal Trademark Dilution Act
|2/14. The House
Judiciary Committee's Subcommittee on Courts, Internet and
Intellectual Property held a hearing on the Federal Trademark
Dilution Act (FTDA), which was enacted over five years ago by
the 104th Congress.
Rep. Howard Coble
(R-NC), the Chairman of the Subcommittee, said in his opening
statement that the FTDA "sought to create a degree of
national uniformity to the law and certainty regarding the
protection of trademarks. Dilution refers to that conduct that
lessens the distinctiveness and value of a mark It includes
several types of conduct such as what is known as
“tarnishment” and “blurring,” which may have
devastating effects for everyone involved, but most
alarmingly, on consumers and the public."
Rep. Howard Berman
(D-CA) said in his prepared
statement that the FTDA "appears to have fallen short
of achieving its objective of providing a uniform, national
dilution law. This failure is due to a significant split among
the Circuits over proper interpretation of a key element of
the Dilution Act. This split has lead to the undesirable
result that, in effect, a different Dilution law applies
depending on the judicial circuit in which one is
Rep. Berman continued that "the Fourth and Fifth Circuits
have interpreted the Dilution Act to require, among other
things, demonstration of actual dilution to maintain a case
under the Act. The First, Second, Third, and Seventh Circuits,
on the other hand, only require demonstration of a likelihood
to cause dilution. The Supreme Court has evidenced no
inclination to resolve this split." He concluded that
"The unresolved split among the Circuits seems to
necessitate further legislative clarification."
See also, prepared testimony of Kathryn
Park (International Trademark Association), Michael
Kirk (American Intellectual Property Law Association), Sherry
Jetter (Polo Ralph Lauren), and Ethan
Horwitz (Darby & Darby).
The ITA's Park stated that "Inconsistent standards from
circuit to circuit make it much more difficult for a famous
mark owner to conduct business nationwide. It also leads to
forum shopping, something this subcommittee sought to prevent
when it drafted the FTDA. To correct this inconsistency and
clarify Congress’ original intent, INTA recommends that
amendments be incorporated into the Lanham Act that explicitly
state that “likelihood of dilution” is the proper
The AIPLA's Kirk stated that the Lanham Act "should be
amended to clarify the standard for proving dilution of a
"famous" mark. ... The AIPLA supports enactment of a
likelihood of dilution standard. In our view, such a standard
is more consistent with the policy objectives of dilution law
and more accurately reflects the intent of Congress when it
enacted" the FTDA.
|Securities Related Bills
Introduced in Congress
|Members of Congress introduced several new securities
related bills following Congressional hearings on the
bankruptcy of Enron.
Sen. Richard Shelby
(R-AL) introduced S 1933, the "Investor Protection
Act of 2002", on February 12. This bill would amend the
Securities Exchange Act of 1934 and the Securities Act of
1933, to address liability standards in connection with
violations of the Federal securities laws. It was referred to
the Senate Banking Committee.
Rep. Gary Ackerman
(D-NY) introduced HR 3736 on February 13. This bill would
amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission
(SEC) to strengthen its auditor independence standards. It was
referred to the House Financial
Sen. Carl Levin (D-MI)
introduced S 1940, the "Ending the Double Standard
for Stock Options Act", on February 13. This bill is
cosponsored by Sen. John
McCain (R-AZ), Sen.
Peter Fitzgerald (R-IL), Sen. Richard Durbin
(D-IL), and Sen. Mark
Sen McCain addressed the bill in the Senate. He stated that
this bill "requires companies to treat stock options for
employees as an expense for bookkeeping purposes if they want
to claim this expense as a deduction for tax purposes. We
introduced similar legislation in 1997 during the 105h
Congress but unfortunately, the special interest with a vested
stake in the status quo prevented this legislation from seeing
the light of day. Currently, corporations can hide these
multimillion dollar compensation plans from their stockholders
or other investors because these plans are not counted as an
expense when calculating company earnings. Even the Federal
Accounting Standards Board, FASB, recognized that stock
options should be treated as an expense for accounting
purposes." Cong. Rec., Feb. 13, 2002, at S740-1.
Sen. Levin stated in the Senate that "As another lesson
learned from the Enron debacle, this bill addresses a costly
and dangerous double standard that allows a company to take a
tax deduction for stock option compensation as a business
expense while not showing it as a business expense on its
financial statement." Cong. Rec., Feb. 13, 2002, at S735.
|FEC to Hold Hearing on
Campaign Activity on the Internet
|2/14. The Federal Election
Commission (FEC) published a notice
in the Federal Register that it will hold a public hearing on
proposed changes to its regulations regarding the status of
campaign related Internet activity conducted by individuals,
and of hyperlinks and endorsement press releases on Internet
Web sites established by corporations and labor organizations.
The hearing will be held at 10:00 AM on Wednesday, March 20,
2002. Requests to testify must be received on or before March
1, 2002. See, Federal Register, February 14, 2002, Vol. 67, No
31, at page 6883.
The FEC is the agency charged with enforcing the Federal
Election Campaign Act (FECA), which regulates political
contributions and expenditures. While the FEC had previously
considered wide ranging regulation of political speech on the
Internet, this hearing pertains to a Notice of Proposed
Rulemaking (NPRM) that merely proposes to permit certain
personal political web sites, and to allow corporations and
unions to put certain hyperlinks and press releases in their
The FEC's NPRM [PDF]
proposes three rule changes. First, it would provide that
there would be no contribution or expenditure within the
meaning of the FECA when individual, without receiving
compensation, uses his or her own computer equipment,
software, Internet services or domain names to attempt to
influence a federal election. Second, it would allow
corporations and unions to include hyperlinks to the web sites
of candidates and political committees. Third, it would allow
corporations and unions to publish in their web sites copies
of press releases endorsing candidates.
Classification of Services, Universal Service, and
|2/14. The The Federal
Communications Commission (FCC) announced that it has
adopted several notices of proposed rulemaking (NPRMs) and an
Order at its February 14 meeting. As is the FCC's practice, it
announced its actions, but did not release copies of the NPRMs
or orders. Rather, it issued a series of press releases.
The FCC stated that one NPRM will examine both the regulatory
classification of "telephone based broadband Internet
access services", and "whether facilities based
broadband Internet access providers should be required to
contribute to support universal service".
The FCC stated that a second universal service fund (USF)
related NPRM will examine whether the FCC should "assess
USF contributions based on the number and capacity of
connections, rather than on the interstate revenues they
The FCC also stated that it adopted a "First Report and
Order that permits the marketing and operation of certain
types of new products incorporating ultra-wideband"
|FCC to Address Regulatory
Classification of Services
|2/14. The FCC issued a press
release that is associated with its NPRM regarding
classification of services. This release states that this NPRM
"is poised to resolve outstanding issues regarding the
classification of telephone based broadband Internet access
services and the regulatory implications of that
classification". It further states that the "the FCC
tentatively concluded the wireline broadband Internet access
services -- whether provided over a third party's facilities
or self-provisioned facilities -- are information services,
with a telecommunications component, rather than
telecommunications services. Information services include such
services as voice mail and e-mail, which ride over
telecommunications facilities." This is CC Docket 02-33.
Powell wrote a separate
statement in which he stated, "I vigorously support
adoption of this Notice." However, he provided little
clarification of the content of the NPRM. Commissioner Kathleen
Abernathy also supported the NPRM. Commissioners Michael Copps
Martin both dissented in part, for different reasons.
Copps wrote that "I will concur in one section of this
Notice, simply to ensure that the universal service questions
have sufficient support to be raised." However, he
objected to the component of the NPRM that would examine the
"statutory classification of telecommunications,
telecommunications services, and information services".
He stated that "This is an enormously far reaching
decision and I, for one, am nowhere near ready to go there,
The Communications Act of 1934, as amended, provides for
different regulatory treatment for different industries, as
they existed at the times of enactment of the various
statutory provisions. For example, there are separate
regulatory regimes for telecommunications (old fashioned phone
service), cable (one way programming delivered over cable),
and broadcasting (programming delivered via radio or TV). The
Communications Act has no statutory regime for regulating
Internet or information services, and until recently, these
have remained largely untouched by the FCC.
However, the deployment of new services that were not
contemplated at the time when the statutory provisions were
written, and the convergence of services, have raised
questions about which regulatory category, if any, should
apply to many new and/or converged services.
Nancy Victory, Director of the National Telecommunications
and Information Administration (NTIA), commended the FCC
for announcing this NPRM. See, NTIA
|FCC Announces That It May
Tax Internet Access
|2/14. The Federal
Communications Commission's (FCC) Notice of Proposed
Rulemaking (NPRM) regarding regulatory classification of
services also addresses the FCC's universal service programs.
Under this NPRM the FCC will also consider whether broadband
Internet access providers should be taxed to support the FCC's
telecommunications subsidy programs.
The FCC stated in its release
the NPRM seeks comment "on whether facilities based
broadband Internet access providers should be required to
contribute to support universal service." The release
also states that the FCC seeks comment on "whether the
Computer Inquiry network access requirements should be
modified or eliminated".
The FCC and its subsidiary corporations run a collection of
cross subsidization programs for the purpose of making
telecommunications services more available in high cost and
low income areas. Also, the more recently developed e-rate
program provides telecommunications services, computer
networking, and Internet services to schools and libraries
under the rubric of universal service. Under the various
universal service programs, business customers subsidize
residential customers, urban customers subsidize rural
customers, and all phone customers subsidize schools.
254(d) of the Telecom Act of 1996 defines the obligation
to contribute to universal service programs. It provides that
"Every telecommunications carrier that provides
interstate telecommunications services shall contribute, on an
equitable and nondiscriminatory basis, to the specific,
predictable, and sufficient mechanisms established by the
Commission to preserve and advance universal service."
The statute does not tax other regulated communications
industries, such as cable and broadcasting. Nor is the
unregulated Internet industry required by the statute to pay.
One of the four Commissioners dissented. Kevin Martin
wrote in his separate
statement that "I dissent from this item's discussion
of universal service obligations of providers of broadband
Internet access. In particular, I object to its determination
that we will consider imposing what is essentially an Internet
access tax, extending universal service contribution
obligations to non-wireline broadband Internet access
providers, such as wireless, cable, and satellite providers.
Unlike wireline providers, these providers have not been
required to make universal service contributions on the basis
of their broadband services."
The FCC also announced that it has adopted a second, less
controversial, Further NPRM regarding universal service
contributions. The FCC issued a release
that states that it will examine "Whether to assess USF
contributions based on the number and capacity of connections,
rather than on the interstate revenues they earn. Under this
proposal, local exchange carriers, interexchange carriers, and
wireless providers would contribute $1 per month for each
connection to a public network for residential users (paging
providers would contribute 25 cents per connection). Business
connection assessments would be based on the maximum available
capacity, or bandwidth, of a connection."
|FCC Permits Certain
|2/14. The Federal
Communication Commission (FCC) also stated that it adopted
a First Report and Order permitting the marketing and
operation of certain types of new products incorporating
ultrawideband (UWB) technology.
UWB devices, which use very narrow pulses with very wide
bandwidths, have potential applications in both radar and
communications technologies. Proponents of its use have argued
that UWB devices can use large portions of already allocated
spectrum with minimal or no interference to incumbent users.
Companies, such as Intel, have argued that UWB is a very
promising technology for enabling short distance, high data
rate connections that can support new and innovative
applications. Incumbent spectrum users have opposed UWB.
The FCC stated in a release
that "UWB technology holds great promise for a vast array
of new applications that have the potential to provide
significant benefits for public safety, businesses and
consumers in a variety of applications such as radar imaging
of objects buried under the ground or behind walls and
short-range, high-speed data transmissions."
The release further states that the FCC's Order "includes
standards designed to ensure that existing and planned radio
services, particularly safety services, are adequately
protected. The FCC will act vigorously to enforce the rules
and act quickly on any reports of interference."
The releases also states that the Order "Provides for use
of a wide variety of other UWB devices, such as high speed
home and business networking devices ... subject to certain
frequency and power limitations. The devices must operate in
the frequency band 3.1-10.6 GHz. The equipment must be
designed to ensure that operation can only occur indoors or it
must consist of hand held devices that may be employed for
such activities as peer to peer operation."
FCC Commissioner Kevin Martin
wrote in a separate
statement that "Consumers also stand to benefit from
enhanced laptops, phones, video recorders, and personal
digital assistants that can wirelessly send and receive
streams of digital video, audio and data. Most importantly,
ultrawideband challenges the notion that use of particular
frequencies or bands is necessarily mutually exclusive. In
defiance of our traditional allocation paradigm that often
forces us to pick “winners and losers” in the face of
competing demands, this technology seems to allow more winners
He added that "I am disappointed that we did not, at this
time, adopt more flexible limits that may have allowed for
even more widespread use of this technology."
In contrast, FCC Commissioner Michael Copps
wrote in a separate
statement that "Because the effects of widespread use
of UWB are not yet fully known, and interference could impact
critical spectrum users, I will support, albeit somewhat
reluctantly, the ultra- conservative ultra- wideband step we
Secretary of Commerce Donald
Evans said "I applaud Chairman Powell and today's
Federal Communications Commission action on ultrawideband
technology. This balanced approach will promote innovation,
stimulate economic growth, create jobs, and enhance public
safety. To remain the world leader, we must continue to
encourage deployment of important new technologies while
protecting those that already exist." See, Department of
Commerce (DOC) release.
The DOC's National
Telecommunications and Information Administration (NTIA)
has conducted studies of UWB and interference.
|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,
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, February 4, 2002, Vol. 67, No. 23, at
Pages 5136 - 5137. 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
U.S.C. § 2242, which is better known as the "Special
301" provisions. See, notice
in the Federal Register, December 26, 2001, Vol. 66, No. 247,
at Pages 66492 - 66493.
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, January 8, 2002, Vol. 67, No. 5, at Pages
828 - 829.
|Monday, Feb 18
|Presidents' Day. The FCC will be closed. The House and
Senate will be in recess February 18 through 22.
|Tuesday, Feb 19
|4:00 PM. Deadline to submit grant applications to the
Department of Labor's Employment and Training Administration
for funds for skills training programs. These grants are
financed by user fees paid by employers in the H-1B visa
program. See, notice
in Federal Register, January 10, 2002, Vol. 67, No. 7, at Page
1368. This notice changes a deadline of February 12 contained
in a previous
notice in the Federal Register, December 14, 2001, Vol.
66, No. 241, at Page 64859 - 64872.
Extended deadline to submit reply comments to the FCC in
response to its Further Notice of Proposed Rulemaking
regarding its cable horizontal and vertical ownership
limits. See, original
notice [PDF] in Federal Register of October 11, 2001, and
[PDF] of January 29, 2002. The NCTA requested the extension.
Deadline to submit comments to the Federal Trade Commission (FTC)
regarding its proposed settlement with Eli Lilly (which
accidentally disclosed the e-mail addresses of 669 subscribers
to a Prozac e-mail list). The proposed settlement requires Eli
Lilly to establish a security program. See, notice
in the Federal Register, February 1, 2002, Vol. 67, No. 22, at
Pages 4963 - 4964.
Deadline to submit comments to the Federal Communications Commission
(FCC) in the matter of Ambient's application for a
determination that it is an exempt telecommunications company.
It is an electric power company that also provides broadband
Internet access and related information services over power
lines to electrical outlets in residences. See, FCC
|Wednesday, Feb 20
|9:00 AM - 4:30 PM. The Federal
Trade Commission (FTC) and the Antitrust Division of the
Department of Justice (DOJ) will hold the third in a series of
joint hearings on antitrust and intellectual property.
There will be two sessions (9:00 AM - 12:30 PM and 2:00 - 4:30
PM) titled "Economic Perspectives on Intellectual
Property, Competition and Innovation". See, FTC
release and DOJ
release. Location: Room 432, FTC, 600 Pennsylvania Ave.,
NW, Washington DC.
8:00 AM - 6:00 PM. The Federal
Communications Bar Association (FCBA) and Georgetown University
Law Center (GULC) will co-host a CLE program titled
"FCC Speaks". FCC Chairman Michael Powell will speak
on "The Path to the Digital Broadband Migration" at
8:30 AM. FCC Commissioners Abernathy, Copps, and Martin will
participate in a panel discussion at 4:20 PM. The program will
also include panels titled "National Broadband
Policy", "Competition Policy Panel",
"Spectrum Allocation Policy", "Media Ownership
Working Group", "Digital Television Task
Force", and "Homeland Security Council". See, full
schedule. The price to attend is $795, $745 (GULC alumni),
$695 (FCBA members), $595 (government employees). Location:
GULC, Moot Courtroom, 600 New Jersey Ave., NW, Washington DC.
|BellSouth Refiles Section
271 Application for Georgia and Louisiana
again submitted an application to the Federal Communications Commission
(FCC), pursuant to Section
271 of the Telecom Act, requesting permission to provide
in region interLATA services in the states of Louisiana and
Georgia. BellSouth withdrew its last request to provide long
distance service in these states on December 20, 2001. See, BS
|People and Appointments
|2/14. The Senate confirmed David Bunning to be a U.S.
District Court judge for the Eastern District of Kentucky. It
also confirmed James Gritzner to be a U.S. District
Court judge in Iowa. Bunning is 35 years old, and the son of a
Sen. Jim Bunning
2/14. Frank Cavaliere joined the staff of Sen. George Allen (R-VA)
as legislative assistant for technology policy. He will focus
on broadband, telecom and privacy issues. He previously worked
2/14. The Securities and
Exchange Commission's (SEC) Office of the Chief Accountant
named four Professional Accounting Fellows for two year terms
beginning in June 2002. They four are Douglas Alkema
(Deloitte & Touche, Seattle office), Gregory Faucette
(Ernst & Young, New York office), Randolph Green
(Andersen, Atlanta office), and Eric Schuppenhauer
(KPMG, New York office). They will join the current
Professional Accounting Fellows, Michael Thompson and Carina
Canedo, and will replace outgoing Professional Accounting
Fellows Scott Blackley, Travis Gilmer, David Kane, and Michael
Pierce. They will be involved in the study and development of
rule proposals, liaison with the professional accounting and
auditing standards setting bodies, and consultation with
registrants on accounting and reporting matters. See, SEC release.
2/14. Trey Smith was named EVP of Operations for
AT&T Broadband. See, AT&T
|2/14. The Securities and
Exchange Commission (SEC) announced that it filed a civil
complaint in U.S. District Court
(DSCar) against Clif Goldstein and others alleging
violation of federal securities laws. The complaint states
that the "defendants engaged in a fraudulent scheme
through which they raised not less than $1.1 million from
twenty five investors in twelve states and three foreign
countries by marketing fictitious high yield investment
contracts promising as much as 100% profit per week. This
common but sophisticated fraud is known as a prime bank
scam." The defendants used the Internet, and other means,
to promote this scheme. The complaint alleges violations of
Sections 17(a)(1) and 17(a)(2) of the Securities Act, Section
10(b) of the Exchange Act, and Rule 10b5 thereunder. It seeks
injunctive relief, disgorgement of ill gotten gains, and civil
penalties. (This is D.C. No. 302048517.)
2/14. The United States filed a submission with the World Trade Organization (WTO)
challenging the amount of trade sanctions claimed by the
European Union in the Foreign Sales Corporation (FSC)
tax regime dispute. The EU wants $4 Billion; the U.S. asserts
that sanctions should not exceed $956 million. See, USTR
2/14. The FBI's National
Infrastructure Protection Center (NIPC) published the February
11 issue of Cybernotes [PDF] in its web site.
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