Tech Law Journal Daily E-Mail Alert
March 15, 2002, 9:00 AM ET, Alert No. 389.
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FCC Declares Cable Internet Access an Interstate Information Service
3/14. The Federal Communications Commission (FCC) announced that it has adopted both a Declaratory Ruling (DR) and Notice of Proposed Rulemaking (NPRM) addressing the legal classification and the appropriate regulatory framework for broadband access to the Internet over cable system facilities.
The FCC stated in a release that "In a Declaratory Ruling adopted today, the FCC concluded that cable modem service is properly classified as an interstate information service and is therefore subject to FCC jurisdiction. The FCC determined that cable modem service is not a ``cable service´´ as defined by the Communications Act. The FCC also said that cable modem service does not contain a separate ``telecommunications service´´ offering and therefore is not subject to common carrier regulation."
The FCC issued a short release and separate statements of three of the FCC Commissioners. However, it did not release either the DR or the NPRM. The vote was three to one. Michael Copps dissented. This is GN Docket No. 00-185.
The Communications Act of 1934, as amended over the years, establishes separate regulatory frameworks for different industries -- such as plain old fashioned telephone service, cable television service offering one way programming, broadcast television and radio, and information services. When established, the various industries were distinct. Determining which regulatory category applied was obvious. However, with new technologies, and industry convergence, services are offered that do not fit into the old regulatory categories.
How cable Internet access is classified for regulatory purposes has consequences. For example, classification as a telecommunications service could lead to the result that cable operators must provide "open access" to their cable facilities to competing ISPs. Similarly, classification as a cable service could lead to regulation by a multitude of local franchising authorities.
Various regulatory agencies and courts have reached different conclusions regarding the regulatory status of Internet access over cable. Various local cable franchising authorities have asserted that it is a cable service. The U.S. Court of Appeals (9thCir) ruled in AT&T v. City of Portland that it is a telecommunications service. (See, TLJ story, Ninth Circuit Reverses District Court in AT&T v. Portland, June 22, 2000.) In contrast, the U.S. Court of Appeals (4thCir) ducked the issue in MediaOne Group v. County of Henrico, 257 F. 3d 356 (2001). (See, TLJ Daily E-Mail Alert No. 225, July 12, 2001.) Heretofore, the FCC had also avoided taking a position.
Commission Michael Copps wrote a strenuous dissent. He wrote that "A powerful case has been made that cable modem services should also be subject to Title II".
FCC Chairman Michael Powell wrote a separate statement in support of the announced actions. Commissioner Kathleen Abernathy also wrote a separate statement in support.
FCC Announces NPRM
3/14. The FCC also wrote in its March 14 release that it has adopted a Notice of Proposed Rulemaking (NPRM) that will examine "Certain issues in light of the FCC's recent initiation of the Wireline Broadband NPRM, including whether there are legal or policy reasons why it should reach different conclusions with respect to wireline broadband and cable modem service."
The NPRM will also examine "The scope of the FCC's jurisdiction to regulate cable modem service, including whether there are any constitutional limitations on the exercise of that jurisdiction", "Whether, in light of marketplace developments, it is necessary or appropriate at this time to require multiple ISP access", and "The role of state and local franchising authorities in regulating cable modem service".
Reaction to FCC Announcements
3/14. Many industry groups and regulated companies commented on the Federal Communications Commission's (FCC) announcement that it has adopted both a Declaratory Ruling (DR) that cable Internet access is an information service, and that it has adopted a Notice of Proposed Rulemaking (NPRM) addressing the appropriate regulatory framework for broadband access to the Internet over cable system facilities.
Robert Sachs, P/CEO of the National Cable and Telecommunications Association (NCTA), which will benefit from the deregulatory position adopted by the FCC, praised the actions. He stated in a release that "Today's FCC decision establishes a needed national policy framework for cable high speed Internet services. The classification of cable modem service as an 'information service,' and not a telecommunications service, sends a strong signal that cable Internet services will be able to continue to develop in a business environment that favors competition over regulation, and encourages new investment. The Commission traditionally hasn't regulated information services. Given the vigorous competition between cable modem, digital subscriber line, and satellite delivered broadband Internet services, a policy of regulatory restraint is particularly appropriate."
Walter McCormick, P/CEO of the U.S. Telecom Association, which represents the regional Bells, stated that the phone companies would like the FCC to also provide regulatory relief for them. He stated in a release that "We are pleased that the Commission has recognized that broadband investment can best be encouraged when its rules are clear and its regulation minimal. Consumers, however, will see little immediate benefit from today's decision, as it does nothing to promote new competition to the local cable monopolies that now dominate the market for high speed Internet access. The important decisions are those that remain, and the challenge for the Commission is to promote intermodal competition by making sure that wireline competitors do not remain handicapped by regulations that disadvantage our offering of functionally equivalent advanced services."
Similarly, Bob Blau, of BellSouth, stated that it "is encouraged and certainly commends the Commission's effort to re-think the type of regulatory framework that should apply to cable modem and DSL services, and more importantly whether these services need to be regulated at all. They don't."
And likewise, Priscilla Ardoin, of SBC, said in a release that "It makes sense that similar services are classified and regulated in the same way. Whether it is DSL, cable modem, satellite or wireless technology, the end product is the same broadband Internet access service. By adopting rules that apply equally to all broadband providers, the FCC has the opportunity to create a unified, nation wide regulatory framework for this country's broadband market."
Bill Would Extend Normal Trade Relations Status to Ukraine
3/13. Rep. Bob Schaffer (R-CO) and others introduced HR 3953, a bill to authorize normal trade relations treatment to the products of Ukraine. It was referred to the House Ways and Means Committee. See also, Schaffer release.
On January 2, the Office of the United States Trade Representative (USTR) published a notice in the Federal Register that it has determined to impose prohibitive duties on certain imports from the Ukraine in order "to obtain the elimination of the acts, policies, and practices of the Government of Ukraine that result in the inadequate protection of intellectual property rights". This action was taken as a result of the Ukraine's failure "to use existing law enforcement authority to stop the ongoing unauthorized production of optical media products and failure to enact an optical media licensing regime ..." The 100% duties cover fuel oil, fertilizers, cooper, aluminum, and other products. See, Federal Register, January 2, 2002, Vol. 67, No. 1, at Pages 120 - 121. The duties took effect on January 23, 2002. See also, USTR release of January 23, 2002.
In February, the International Intellectual Property Alliance (IIPA) asked the USTR to keep Ukraine as a Special 301 "Priority Foreign Country" until it passes and enforces an acceptable optical media law.
Treasury Secretary Testifies Re IRS IT Funding
3/14. Treasury Secretary Paul O'Neill testified before the Senate Appropriations Committee's Subcommittee on Treasury and General Government regarding regarding the Fiscal Year 2003 budget for the Treasury Department. See, O'Neill's prepared testimony.
He testified, among other things, about the Department's efforts to modernize its information technology, and to provide online services, such as for filing of tax returns. He stated that the IRS "continues to work towards the Congressional goal of having 80% of all tax and information returns filed electronically by 2007. As this method of tax filing becomes more popular, the IRS has reduced processing costs significantly per document, with less input errors and reduced handling time and storage costs as well."
He asserted that the IRS "is committed to providing excellent customer service and takes pride in the integrity of their systems. As a result, they are continually making improvements in operations efficiency and performance by adopting best business practices and state of the art technology."
He stated that the IRS "is replacing its antiquated computer system with an information technology capacity that is appropriate for the new century." He continued that "The Department's FY 2003 budget provides $450 million for the continuation of effort in re-engineering business processes and developing new business systems to replace their antiquated and obsolete system. This amount is $58 million above the FY 2002 enacted level of $392 million, and $378 million above the FY 2001 enacted level of $72 million."
House Commerce Committee Leaders Write Sec. Evans Re ICANN
3/13. Rep. Billy Tauzin (R-LA), Rep. John Dingell (D-MI), Rep. Fred Upton (R-MI), Rep. Ed Markey (D-MA), and Rep. John Shimkus (R-IL) wrote a letter to Secretary of Commerce Donald Evans regarding the Internet Corporation for Assigned Names and Numbers (ICANN).
They wrote: "According to the Memorandum of Understanding between ICANN and the Department for implementing a transition for ICANN's technical management of Internet names and addresses, ICANN was to be founded upon the principles of ``stability, competition, bottom-up coordination, and representation.´´ Since its inception, however, ICANN has increasingly departed from that limited role. Its unchecked growth into general Internet policymaking and regulation of commercial rights and interests is very disturbing."
They also offered several recommendations. For example, "The Department should ensure that ICANN's Board of Directors is fully representative of all stakeholders, including corporate stakeholders and members of the general Internet community".
They also recommended that "ICANN should limit its activities to its initial scope of jurisdiction, i.e., coordinating core Internet functions and the technical aspects of naming and address allocation issues". They also suggested that "There should be clear, written procedures for approving new gTLDs, as well as any future technical issues, including an impartial appeals process for those who have process or substantive complaints."
Finally, the group stated that "we want to strongly reiterate our support for continued Department of Commerce control over the so-called ``A-root´´ server. We believe that any assumption of control over that asset by any outside entity would be contrary to the economic and national security interests of the United States."
Reps. Tauzin and Dingell are the Chairman and ranking Democrat of the House Commerce Committee. Reps. Upton and Markey are the Chairman and ranking Democrat of the Telecom and Internet Subcommittee.
CIIP Holds Hearing on OddzOn Products, Collaborative Research, and Patents
3/14. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property (CIIP) held a hearing titled "Patent Law and Non-Profit Research Collaboration."
Rep. Howard Coble (R-NC), the Chairman of the Subcommittee, said in his opening statement that "The Subcommittee has been approached by the university community with serious concerns about an issue arising from a recent case interpreting the Patent Act. In the OddzOn Products case, the Court of Appeals for the Federal Circuit held that certain confidential material exchanged in the course of a research collaboration would defeat the patents later developed."
The U.S. Court of Appeals (FedCir) held in OddzOn Products v. Just Toys, 122 F.3d 1396, 43 U.S.P.Q. 2d 1641 (Fed. Cir. 1997), that "subject matter derived from another not only is itself unpatentable to the party who derived it under § 102(f), but, when combined with other prior art, may make a resulting obvious invention unpatentable to that party under a combination of §§ 102(f) and 103."
35 U.S.C. § 103(c) provides that "Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f) and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the invention was made, owned by the same person or subject to an obligation of assignment to the same person." 35 U.S.C. § 102(f) provides that "A person shall not be entitled to a patent unless ... (f) he did not himself invent the subject matter sought to be patented".
Rep. Coble added that "I cannot emphasize enough the benefit of university patents in an open society, since patents result in the publication of scientific and technical data for the world to study and build upon."
Rep. Howard Berman (D-CA), the ranking Democrat on the Subcommittee, said in his opening statement that "What makes this particularly troubling is that this affects research universities and non-profit institutions much more than it does private companies. There are ways to maneuver around the threat of 103(c) -- by creating a joint venture, or by assigning intellectual property rights to a single entity. However, many state and federal government organizations cannot assign rights to an outside partner due to their established laws and practices. Public research institutions may not have the means to circumvent the potential problems of 103(c)."
Kevin Rivette, a patent attorney, and author of Rembrandts in the Attic: Unlocking the Hidden Value of Patents, said in his prepared testimony that "I believe that legislation that furthers this special Non-profit research collaboration with private industry is in the best interest of our country ..."
Similarly, Carl Gulbrandsen, who testified on behalf of a University of Wisconsin patent management group, said in his prepared testimony that the Congress should pass legislation to reverse the Oddzon case, and promote university collaboration.
In contrast, Charlie Van Horn, who testified on behalf of the American Intellectual Property Law Association, said in his prepared testimony that "special care needs to be taken with respect to any efforts to amend 35 U.S.C. § 103(c) to ensure that it would not complicate the operation or implementation of this section and/or create traps for unwary collaborators."
Similarly, Jon Grossman, an attorney with the law firm of Dickstein Shapiro, said in his prepared testimony that the Oddzon case does not threaten universities, and that "broadening the scope or meaning of Section 103(c) may cause unintended problems that negatively impact the U.S. Patent & Trademark Office (“PTO”), complicate patent practice, and harm competition."
Senate Committee Holds Hearing on Copy Protection
3/14. The Senate Judiciary Committee held a hearing titled "Competition, Innovation, and Public Policy in the Digital Age: Is the Marketplace Working to Protect Digital Creative Works?"
Sen. Patrick Leahy (D-VT), Chairman of the Committee, said in his opening statement that "Senator Hatch and I would ask the senior executives at media, information technology, and consumer electronics companies to get more involved in the discussions underway about digital rights management systems, and make sure that the people participating in those talks meet on a regular and frequent basis. ... We know that legislation may be necessary to implement some of the intra- industry agreements that are reached and we want to be in a position to move promptly and thoughtfully when the time is ripe."
Sen. Orrin Hatch (R-UT), the ranking Republican on the Committee, stated in his opening statement that "I want to encourage the parties -- the content community and the information technology community -- to continue and redouble your efforts to find common ground. These are complex issues and with the right resources, I am confident you can resolve these problems." Unlike, Sen. Ernest Hollings (D-SC), the Chairman of the Senate Commerce Committee, neither suggested that the Congress should step in and pass legislation.
Craig Barrett, the CEO of Intel, said that the Congress should not impose regulatory solutions. See, prepared testimony. In contrast, Hillary Rosen, P/CEO of the Recording Industry Association of America (RIAA) submitted a statement [PDF] in which she said that "additional help may be needed, whether in the form of enhanced legal remedies, more active enforcement of the law, or legislation requiring implementation of technical standards to ensure that all technology companies provide the same level of needed protection." However, she was not a witness at the hearing.
See also, prepared testimony of the other hearing witnesses: Richard Parsons (AOL Time Warner), Jonathan Taplin (Intertainer), Joe Kraus, and Justin Hughes (UCLA Law School).
House Subcommittee Holds Hearing on Technology Administration Budget
3/14. The House Science Committee's Subcommittee on Environment, Technology, and Standards held a hearing titled "Technology Administration: Review and Reauthorization". The hearing examined the proposed budget for Fiscal Year 2003 for the Technology Administration (TA).
The TA, which is a part of the Commerce Department, consists of the National Institute of Standards and Technology (NIST), the National Technical Information Service (NTIS), and the Office of Technology Policy (OTP). The NIST budget constitutes more than 98% of the TA's budget.
See, opening statement of Rep. Vernon Ehlers (R-MI), Chairman of the Subcommittee. See also, prepared testimony of Phillip Bond (Under Secretary of Commerce for Technology, and Chief of Staff to the Secretary of Commerce), Arden Bement (Director of the NIST), Christopher Hill (George Mason University), Birgit Klohs (The Right Place Program), and Michael Wojcicki (The Modernization Forum).
People and Appointments
3/14. The Senate Judiciary Committee voted to reject the nomination of U.S. District Court Judge Charles Pickering to be a judge on the U.S. Court of Appeals (5thCir), by a straight party line vote of 10 to 9. President Bush criticized the vote. He said in a statement that "The voice of the entire Senate deserves to be heard." See also, statement of Sen. Patrick Leahy (D-VT), Chairman of the Committee.
3/11. Broadcom appointed George Farinsky to its Board of Directors. See, release.
Friday, March 15
The House will not be in session.
9:00 AM. The AFL-CIO's Department for Professional Employees will host a panel of speakers who will advocate retention of the FCC's newspaper and broadcast cross ownership rules. FCC Commission Michael Copps will speak. See, AFL-CIO notice. For more information, contact Leandra Kennedy at lkennedy @aflcio.org or 202 638-0320. Location: National Press Club, Holeman Lounge, 529 14th St. NW, 13th Floor.
9:30 - 11:00 AM. The Progressive Policy Institute (PPI) will host a panel discussion on the impact of new homeland security efforts on privacy issues. The panelists will be Robert Atkinson (PPI), Shane Ham (PPI), and Jim Dempsey (Center for Democracy and Technology). Location: PPI, 600 Pennsylvania Ave., SE, Suite 400.
10:00 AM. - 12:00 NOON. The Center for Strategic and International Studies (CSIS) will host a panel discussion titled "Retooling the WTO: The Doha Round and Beyond". The participants will be Dorothy Dwoskin (Assistant USTR for WTO and Multilateral Affairs), Eduardo Perez Motta (Ambassador to the WTO, Mexico Chairman, WTO Council on Intellectual Property), Rufus Yerxa (former Deputy USTR), and John Weekes (former Canadian Ambassador to the WTO). See, CSIS notice. Location: CSIS, 1800 K Street, N.W., B-1 conference level.
11:00 AM. FTC Chairman Timothy Muris will give the keynote address at the Consumer Federation of America's Assembly. Location: Washington Plaza Hotel, 10 Thomas Circle, NW.
Deadline to submit comments to the FCC on the World Radiocommunication Conference Advisory Committee's (WRC-03 Advisory Committee) recommendations of February 6, 2002, regarding the 2003 World Radiocommunication Conference (WRC-03). See, notice [16 pages in PDF] requesting public comments, and attached recommendations.
Monday, March 18
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Costa de Oro TV v. FCC, No. 01-1153. Judges Ginsburg, Henderson and Tatel will preside. Location: 333 Constitution Ave. NW.
12:00 NOON. Deadline to submit requests to USTR to testify orally at its April 1 hearing negotiation of a U.S. Singapore Free Trade Agreement. See, notice in the Federal Register, Vol. 67, No. 40, at pages 9349 - 9351.
Deadline to submit comments to the FCC in response to its notice of proposed rulemaking (NPRM) regarding its unbundling analysis under § 251 of the Communications Act and the identification of specific unbundling requirements for incumbent local exchange carriers (ILECs). The FCC adopted this NPRM at its December 12 meeting. This is CC Docket No. 01-338. See, notice in the Federal Register, January 15, 2002, Vol. 67, No. 10, at Page 1947 - 1953. Note: SBC submitted a request for extension of deadline [PDF] on March 11.
Tuesday, March 19
9:30 AM - 4:30 PM. The FTC and the Department of Justice (DOJ) Antitrust Division will continue their joint hearings titled "Competition and Intellectual Property Law and Policy in the Knowledge Based Economy." From 9:30 AM until 12:00 NOON, there will be presentations on "Business Perspectives on Patents". From 1:30 until 4:30 PM, there will be presentations on "Business Perspectives on Patents: Biotech and Pharmaceuticals. See, agenda. Location: Room 432, FTC, 600 Pennsylvania Ave., NW.
10:00 AM. The Senate Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget estimates for Fiscal Year 2003 for the Federal Trade Commission, and other agencies. Location: Room 138, Dirksen Building.
Wednesday, March 20
9:30 AM. The Senate Commerce Committee will hold a hearing on "competition in the local telecommunications marketplace". Sen. Ernest Hollings (D-SC) will preside. Location: Room 253, Russell Building.
9:30 AM - 4:30 PM. The FTC and the Department of Justice (DOJ) Antitrust Division will continue their joint hearings titled "Competition and Intellectual Property Law and Policy in the Knowledge Based Economy." From 9:30 AM until 12:00 NOON, there will be presentations on "Business Perspectives on Patents: Hardware and Semiconductors". From 1:30 until 4:30 PM there will be presentations on "Business Perspectives on Patents: Software and the Internet". See, agenda. Location: Room 432, FTC, 600 Pennsylvania Ave., NW.
10:00 AM. The Senate Judiciary Committee's Subcommittee on Technology, Terrorism, and Government Information Subcommittee will hold hearings to examine identity theft and information protection. Sen. Dianne Feinstein (D-CA) will preside. Location: Room 226, Dirksen Senate Office Building.
CANCELLED. 10:00 AM. The FCC's Technological Advisory Council will hold a meeting. See, notice in Federal Register, February 26, 2002, Vol. 67, No. 38, at Page 8801. Location: FCC, 445 12th St., SW., Room TW-C305, Washington DC. See, cancellation notice in Federal Register, March 11, 2002, Vol. 67, No. 47, at Page 10920. The next meeting is April 26; see, FCC notice of March 12.
12:15 PM. The FCBA's Cable Committee will host a luncheon. The speaker will be Catherine Bohigian, Legal Advisor to FCC Commissioner Kevin Martin. The price to attend is $15. RSVP to Wendy Parish at wendy@fcba.org by 5:00 PM on March 18.
2:00 PM. The House Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2003 for the Office of the U.S. Trade Representative (USTR).
6:00 - 8:00 PM. The FCBA will host a Continuing Legal Education (CLE) seminar titled "Telecommunications 201". Location: Capital Hilton Hotel, 16th and K Streets, NW.
Thursday, March 21
8:30 AM - 12:00 NOON. The law firm of Steptoe & Johnson and The Open Group will host a workshop titled "Liability and Information Assurance: The Role of Law, Regulation, and Self Regulation". The workshop will focus on allocating liability for breaches of information security, and the various roles that law, regulation, and private contractual agreements can or should play in the allocation of responsibility for information security failures. RSVP to salbertaz @steptoe.com. For more information, contact mschneck @steptoe.com. Location: 1330 Connecticut Avenue, NW.
10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the administration's proposed budget estimates for FY 2003 for the Federal Bureau of Investigation, Immigration and Naturalization Service, and the Drug Enforcement Administration. Location: Room 116, Dirksen Building.
12:15 PM. The FCBA's Transactional Practice Committee will host a brown bag lunch on satellite and other international telecommunications transactions. RSVP to Brian Madden at 202 416-6770. Location: Leventhal Senter & Lerman, 2000 K Street, NW.
2:30 PM. The Senate Commerce Committee's Subcommittee on Science, Technology, and Space will hold hearing to examine federal research and development issues. Location: Room 253, Russell Building.
3:30 PM. Margaret Radin (Stanford University Law School) will give a lecture titled "Contract Today and Tomorrow: Binding Commitment in the Networked World". Location: Georgetown University Law Center, Faculty Lounge, 5th Floor, McDonough Hall, 600 New Jersey Ave., NW.
8:00 PM. Deadline to submit applications to the NTIA for Technology Opportunity Program (TOP) grants for FY 2002. See, notice in Federal Register.
More News
3/13. Rep. Lindsey Graham (R-SC) and others introduced HR 3957, the Canceling Loans to Allow School Systems to Attract Classroom Teachers Act (CLASS ACT), a bill to increase to $17,500 the amount of student loans that may be forgiven for teachers in mathematics, science, and special education. It was referred to the House Committee on Education and the Workforce. See also, Graham release.
3/13. Rep. Ron Paul (R-TX) stated in the House that "the administration's recent decision to impose a 30 percent tariff on steel imports" is "a step backward toward the protectionist thinking that dominated Washington in decades past." He asked rhetorically: "What happened to the wonderful harmony that the WTO was supposed to bring to the global market? The administration has been roundly criticized since the steel decision was announced last week, especially by our WTO ``partners.´´ The European Union is preparing to impose retaliatory sanctions to protect its own steel industry. EU Trade Commissioner Pascal Lamy has accused the U.S. of setting the stage for a global trade war". See, Cong. Rec., March 13, 2002, at pages H887-8.
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