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September 13, 2002, 9:00 AM ET, Alert No. 508.
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FCC Seeks Comments on Scenarios for Relief of NextWave Re-Auction Winners
9/12. The Federal Communications Commission (FCC) issued a Public Notice [7 pages in PDF] in which it asks for public comments regarding two possible scenarios for providing relief to the Auction No. 35 winners: full refund and option to dismiss all pending applications, and selective opt out for pending applications.
Companies, such as Verizon Wireless and Deutsche Telekom's T-MobileUSA, who were the winning bidders in the FCC's ill fated January 2001 re-auction of spectrum previously auctioned to NextWave, are currently obligated to pay a total of $16 Billion for the spectrum, if they do ever actually receive it.
NextWave obtained spectrum licenses at FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses, and make payments under an installment plan, thus creating a debtor creditor relationship between NextWave and the FCC. NextWave did not make payments required by the plan, and filed a Chapter 11 bankruptcy petition. The FCC cancelled the licenses. It then proceeding to re-auction the disputed spectrum. The U.S. Court of Appeals (DCCir) ruled in its June 22, 2001, opinion that the FCC is prevented from canceling the spectrum licenses by § 525 of the Bankruptcy Code. The FCC petitioned the Supreme Court for writ of certiorari. The Court granted certiorari. Oral argument is scheduled for October 8.
On March 26, 2002, the FCC issued a partial refund order which granted partial refunds of the down payments made by certain winning bidders in Auction No. 35. The FCC wrote in its September 12 Public Notice that "Pursuant to the Partial Refund Order, the Commission has already refunded approximately $2.8 billion to the Auction No. 35 winning bidders ...", but that the FCC has retained $489,548,061, and that the total amount of the obligations of the Auction No. 35 winners to the FCC is now $16,318,268,700.
The winning bidders in Auction No. 35, and their many supporters in Congress, have repeatedly argued that these financial obligations adversely affect their ability to improve their facilities, because they must always have this capital on hand in the event the the FCC is ever able to provide them spectrum rights.
The Public Notice states that "Specifically, we seek comment on whether we should consider further, inter alia, the following scenarios: (1) Full Refund and Option to Dismiss All Pending Applications. Upon request, the Commission would refund to the payor of record the full amount of monies on deposit with the Commission for the licenses subject to the NextWave litigation and Urban Comm proceedings. The Commission would also provide a period of time for individual applicants to request voluntary dismissal of all of their applications, with prejudice. Under this scenario, applicants obtaining a full refund and choosing to dismiss their applications would lose all claims to the affected Auction No. 35 licenses. Should the Commission prevail in the litigation, new initial licenses for the spectrum would be assigned by auction at a future date."
The second scenario announced in the Public Notice is as follows: "(2) Selective Opt-Out for Pending Applications. Under this scenario, the Commission would provide applicants the opportunity to pick and choose licenses for which to keep the applications pending and which to dismiss. We seek comment on whether all of the down payments should be refunded or only down payments associated with the dismissed licenses."
FCC Commissioner Michael Copps issued a concurring statement. He wrote that "I believe that there are strong equitable arguments to support returning the remaining funds on deposit related to Auction 35, and even for dismissing all pending applications related to that auction. But I am frankly somewhat concerned about the timing of today's Public Notice, as drafted. I have been in this town long enough to know that there is something called the Law of Unintended Consequences, and I never underestimate its power. I must, therefore, concur rather than approve of this action."
Tom Wheeler, P/CEO of the Cellular Telecommunications & Internet Association (CTIA), praised the FCC's Public Notice. He stated in a release that "By proposing to remove this enormous contingent liability, the FCC, with the support of the Bush Administration and Congress, will free billions of dollars for network expansion and upgrades, which will in turn, create tens of thousands of jobs ... Today's action promises to provide a boost to every wireless carrier, whether they participated in the auction or not. This debt overhang had created severe capital restrictions throughout the entire industry".
Public comments are due by September 30, 2002. Reply comments are due by October 15, 2002.
RIAA Files Proposed Injunction Order in Aimster Case
9/11. The Recording Industry Association of America (RIAA) filed with the U.S. District Court (NDIll) its Plaintiffs' Proposed Preliminary Injunction Order and Memorandum in Support [101 pages in PDF] on behalf of its member companies in the proceeding titled In Re Aimster Copyright Litigation.
On September 4, the District Court issued its Memorandum Opinion and Order granting a motion for preliminary injunction filed by various record companies and music publishers against the Aimster file sharing service, which is now known as Madster. The Court also requested that the plaintiffs submit proposed language for the preliminary injunction order.
Greenspan Testifies Regarding Fiscal Issues
9/12. Federal Reserve Board Chairman Alan Greenspan testified before the House Budget Committee on current fiscal issues.
He stated in his prepared testimony that "The U.S. economy has confronted very significant challenges over the past year -- major declines in equity markets, a sharp retrenchment in investment spending, and the tragic terrorist attacks of last September. To date, the economy appears to have withstood this set of blows well, although the depressing effects still linger and continue to influence, in particular, the federal budget outlook."
He elaborated that "A year ago, the Congressional Budget Office expected the unified budget to post large and mounting surpluses over the coming decade. As you know, CBO is currently forecasting that, if today's policies remain in place, the unified budget will post deficits through fiscal year 2005. For the fiscal year just ending, CBO now projects a budget balance that is more than $300 billion below the level it had projected a year ago."
However, he added that, "despite the budget erosion over the past year, our underlying fiscal situation today remains significantly stronger than that of a decade ago, when policymakers were struggling to rein in chronic large deficits and the ratio of federal debt to gross domestic product was approaching 50 percent and climbing."
See also, excerpts from statement by Rep. Jim Nussle (R-IA), the Budget Committee Chairman.
Tech Crime Report
9/10. Juliette Quintero plead guilty in U.S. District Court (CDCal) to one count of mail fraud and two counts of wire fraud in connection with defrauding bidders in auctions conducted via eBay. She auctioned items, received payments, but did not deliver the goods. See, USAO release and CCIPS release.
9/10. Timothy Ganley, a former VP for Strategic Sales at Critical Path, was sentenced by the U.S. District Court (NDCal) to serve six months in prison. He previously plead guilty to charges contained in a criminal indictment of insider trading in violation of 15 U.S.C. § 78j(b), 15 U.S.C. § 78ff(a), and 17 CFR 240.10b-5. See, USAO release.
People and Appointments
Bryan Tramont9/12. FCC Chairman Michael Powell named Bryan Tramont (at right) his Senior Legal Advisor. Tramont will also be responsible for wireless and international issues. Since June 2001, Tramont has been Senior Legal Advisor to FCC Commissioner Kathleen Abernathy. Before that, he advised Abernathy on wireless, international, technology and enforcement issues. Before that, he was Legal Advisor and then Senior Legal Advisor to former FCC Commissioner Harold Furchtgott Roth. And before that, he was an attorney in the Washington DC office of the the law firm of Wiley Rein & Fielding. See, FCC release [PDF].
9/12. FCC Commissioner Kathleen Abernathy named Matthew Brill to be her Acting Senior Legal Advisor. He is currently her Legal Advisor for wireline competition issues. In addition, John Branscome, of the Commercial Wireless Division of the Wireless Telecommunications Bureau, will be detailed to Abernathy as Acting Legal Advisor for wireless, international and technology issues until a permanent advisor is named. See, FCC release [PDF].
Peter Tenhula9/12. Peter Tenhula (at right) was named Co- Director of the FCC's Spectrum Policy Task Force. The FCC stated in a release [PDF] that he "will be working closely with Dr. Paul Kolodzy, current Director of the Task Force, on the next phases of its mission. Mr. Tenhula will be primarily responsible for coordinating all Commission spectrum policy activities across the various bureaus, with Congress and with the administration." Tenhula will be replaced in his current position as Senior Legal Advisor to FCC Chairman Powell by Bryan Tramont. Tenhula joined Powell's staff as a Legal Advisor in 1997. He has worked in various positions at the FCC for 12 years. He has also worked for Rep. Mike Oxley (R-OH) and the National Association of Broadcasters (NAB).
9/12. The Senate Banking Committee unanimously approved the nomination of Wayne Abernathy to be Assistant Secretary of the Treasury for Financial Institutions. Abernathy has worked for the Committee since 1981. He is currently the Republican Staff Director. See, Abernathy's prepared statement.
9/12. Leslie Lott, David Moyer and Jon Sandelin were named to the U.S. Patent and Trademark Office's (USPTO) Trademark Public Advisory Committee (TPAC). The TPAC was created by the American Inventors Protection Act in 1999 to advise the Under Secretary of Commerce and Director of the USPTO on the agency's operations, including its goals, performance, budget, and user fees. Leslie Lott is an attorney with the law firm of Lott & Friedland. She focuses on patent, trademark, and copyright law. David Moyer is an Associate General Counsel of Intellectual Property at the Procter & Gamble Company. Jon Sandelin is a Senior Licensing Associate at Stanford University, where he is the Founder and Director of the Trademark Licensing Program. See, USPTO release.
9/12. President Bush nominated five people to be federal judges: Maurice Hicks (to be a U.S. District Judge for the Western District of Louisiana), Ralph Erickson (U.S.D.C., District of North Dakota), William Quarles (U.S.D.C., District of Maryland), Thomas Ludington (U.S.D.C., Eastern District of Michigan), and Victor Wolski (U.S. Court of Federal Claims, for a term of fifteen years). See, White House release.
US Chamber Reports on PR China's Compliance with WTO Obligations
9/12. The U.S. Chamber of Commerce released a report [30 pages in PDF] titled "First Steps: A U.S. Chamber Report on China's WTO Progress". The report concludes that it "is too early to issue sweeping judgments about China's overall compliance with its WTO obligations, many of which are due to be phased in over a period of years." The report also contains specific findings and recommendations regarding enforcement of intellectual property rights in China.
In general, the report argues that "while China's progress must indeed be measured against the commitments it made to join the WTO, realistically, it must also be evaluated in the context of the enormity of this undertaking." It also finds that China has made "promising first steps" in several areas, including its issuance of "Administrative Regulations on Operational Licenses for Telecom Business", its "good faith efforts" to revise its laws and regulations governing the protection of intellectual property rights.
In contrast, the report also notes that "international companies are also concerned about insufficient progress in other areas. There are challenges that stem from a lack of transparency, insufficient consultation in the development of regulations, the lack of an independent regulator, inadequate protection of intellectual property rights, and the dominance of domestic political considerations over commercial decision making."
In the area of intellectual property rights, the report states that "China agreed to comply with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) upon its accession to the WTO, including changes to laws and administrative practices to conform to the agreement. Although China has revised its laws to provide criminal penalties for certain IPR violations, poor enforcement and weak penalties mean that widespread IPR violations continue. While enforcement raids occur, the political will and legal institutions necessary to ensure that deterrent punishments are imposed on intellectual property pirates are clearly lacking, and there is little sign of this changing."
"General indications are that China has been working in good faith to bring its laws and regulations into TRIPs compliance. However, technical shortcomings and bureaucratic slowness has meant that many of these laws and regulations have not been brought into force, as required by China’s commitments. In addition, as noted, while enforcement raids occur, the political will and legal institutions necessary to ensure that deterrent penalties are imposed on IP pirates are clearly lacking, and there is little sign of this changing."
The report offers several recommendations with respect to IPR in China. First, "China needs to revise its IPR laws and regulations, including those related to patents, trademarks, trade secrets, integrated circuits, and copyrights, to bring them into full compliance with TRIPs."
Second, the reports recommends that Chinese officials need more "political will", and that the "Rule of law generally, including in such areas as transparency, judicial review, and uniform enforcement of laws, also needs to be strengthened."
Finally, the report states that the "Lack of knowledge and understanding and insufficient training also impedes effective enforcement efforts. ... The U.S. government should develop a unified, mid-to-long term strategic plan for capacity building in the IP area, to replace the ad hoc and therefore haphazard efforts that are currently underway."
More News
9/12. The U.S. International Trade Commission (USITC) announced that it has extended its deadline to complete its investigation titled "Certain Integrated Circuits, Processes for Making Same, and Products Containing Same" until October 7, 2002. This is the USITC's Investigation No. 337-TA-450. See, notice in the Federal Register, September 12, 2002, Vol. 67, No. 177, at Pages 57850 - 57851.
9/12. Assistant U.S. Trade Representative (USTR) Dan Brinza gave a speech to a special session of the World Trade Organization (WTO) Dispute Settlement Body (DSB) in Geneva, Switzerland, in which he advocated making the WTO dispute settlement system more open and transparent. He addressed permitting amicus curiae briefs, and publication of submissions, statements and final reports.
9/12. The Electronic Privacy Information Center (EPIC) and other groups published a book titled "Litigation Under the Federal Open Government Laws 2002". The 570 page book covers the Freedom of Information Act,  Privacy Act, Federal Advisory Committee Act, and Government in the Sunshine Act. The price is $40.00. See, information and online order page.
9/12. The House Judiciary Committee's Subcommittee on the Constitution held an oversight hearing titled "Privacy Concerns Raised by the Collection and Use of Genetic Information by Employers and Insurers". See, opening statement by Rep. Steve Chabot (R-OH), Chairman of the Subcommittee. See also, prepared testimony of witnesses: Deborah Peel (American Psychoanalytic Association), John Rowe (Aetna), Joanne Hustead (Georgetown University's Institute for Health Care Research and Policy), and Tom Miller (Cato Institute).
9/12. The Senate Commerce Committee's Subcommittee on Science, Technology, and Space Subcommittee held a hearing to examine S 2537, the Dot Kids Implementation and Efficiency Act of 2002, and HR 2417, the Dot Kids Domain Name Act of 2001. These bills would facilitate the creation of a new second level Internet domain within the U.S. country code domain that would provide a safe online environment for children. The House has already passed another version -- HR 3833. See, prepared testimony of Rep. John Shimkus (R-IL), sponsor of HR 3833. See also, prepared testimony of other witnesses: Ruben Rodriguez (National Center for Missing and Exploited Children), Ann Brown (Safer America for Everyone), and James Casey (Director of Policy and Business Development of NeuStar, which operates the .us country code top-level domain under contract with the Department of Commerce).
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Notices & Disclaimers
Copyright 1998 - 2002 David Carney, dba Tech Law Journal. All rights reserved.
Friday, September 13
The House will meet at 9:00 AM for legislative business. No votes are expected past 2:00 PM.
9:00 AM - 5:00 PM. Day two of a two day conference hosted by the International Intellectual Property Institute (IIPI) titled "Specialized Intellectual Property Courts". See, IIPI release and online registration form. Location: Markey National Courts Bldg., 717 Madison Place, NW.
10:45 AM. Press conference associated with the International Intellectual Property Institute's (IIPI) conference titled "Specialized Intellectual Property Courts". Location: Court Room 203, Markey National Courts Bldg., 717 Madison Place, NW.
10:00 AM. The FCC's Network Reliability and Interoperability Council (NRIC) will hold a meeting. Location: FCC, 445 12th Street, SW, Commission Meeting Room.
Deadline to submit comments to the FTC regarding its proposed consent agreement with MSC Software Corporation. See, Agreement Containing Consent Order [22 pages PDF]. See, notice in Federal Register.
Monday, September 16
Yom Kippur.
Deadline to submit comments and notices of intention to participate to the Copyright Office in response to its notice in the Federal Register directing "all claimants to royalty fees collected in 1999, 2000 and 2001 for the distribution of digital audio recording devices and media to submit comments as to whether a controversy exists as to the distribution of the royalty fees in the 1999, 2000 and 2001 Musical Works Funds."
Deadline to register for the FCC's September 18 auction seminar for Auction No. 46. This is for the 1670-1675 MHz band auction, scheduled for October 30, 2002. See, notice with registration form [PDF].
Tuesday, September 17
8:00 AM EDT. Qwest Communications will web cast a meeting between investors and Ch/CEO Richard Notebaert and VCh/CFO Oren Shaffer. See, web cast page for both live cast and replay. See also, release.
9:00 AM - 5:00 PM. Day one of a three day meeting of the Computer System Security and Privacy Advisory Board (CSSPAB). The agenda includes (1) discussion of a CSSPAB privacy report, (2) discussion of a CSSPAB baseline standards report, (3) updates on computer security legislation, (4) an update by the OMB on privacy and security issues, (5) an agency briefing on compliance with the Government Paperwork Elimination Act (GPEA), (6) and a discussion of DMCA issues. See, notice in Federal Register, August 30, 2002, Vol. 67, No. 169, at Pages 55817 - 55818. Location: General Services Administration, 7th and D Streets, SW, 5700.
9:00 AM. The Bureau of Industry and Security's (BIS) Regulations and Procedures Technical Advisory Committee (RPTAC) will hold a partially open meeting. The agenda for the open portion of the meeting includes a presentation of papers or comments by the public, an update on pending regulations, a discussion of TSR MTOP limit comments, a discussion of the Unverified List, a review of SNAP 2002 status, a discussion of AES regulations & SED recordkeeping requirements, a discussion on implementation of CCL User Friendliness recommendations, and updates from working groups. See, notice in the Federal Register. Location: Room 3884, Department of Commerce, 14th Street between Constitution and Pennsylvania Avenues, NW.
9:30 AM. The U.S. Court of Appeals (DCCir) will hold an en banc hearing in Ruggiero v. FCC, No. 00-1100. On February 8, a three judge panel issued its split opinion holding unconstitutional the ban on issuance of low power FM radio broadcast licenses to anyone who has previously engaged in an unlicensed operation. The set of people who have engaged in unlicensed broadcasting who may seek low power FM licenses is a very small and insignificant group. However, this case could have a broader impact. The en banc panel may provide an analysis of the application of the First Amendment to broadcast speech that affects a wider range of speakers. Location: Courtroom 20, 333 Constitution Ave., NW.
12:00 NOON - 4:30 PM. The Cato Institute will host an event titled "The Supreme Court: Past and Prologue. A Look at the October 2001 and October 2002 Terms". Location: 1000 Massachusetts Avenue, NW.
Wednesday, September 18
9:00 AM - 5:00 PM. Day two of a three day meeting of the Computer System Security and Privacy Advisory Board (CSSPAB). The agenda includes (1) discussion of a CSSPAB privacy report, (2) discussion of a CSSPAB baseline standards report, (3) updates on computer security legislation, (4) an update by the OMB on privacy and security issues, (5) an agency briefing on compliance with the Government Paperwork Elimination Act (GPEA), (6) and a discussion of DMCA issues. See, notice in Federal Register, August 30, 2002, Vol. 67, No. 169, at Pages 55817 - 55818. Location: General Services Administration, 7th and D Streets, SW, 5700.
9:00 AM. FCC Commissioner Kevin Martin will speak at an Alliance for Public Technology event. Location: Loew's L'Enfant Plaza Hotel.
9:30 AM - 1:00 PM. The FCC will hold an auction seminar for Auction No. 46 applicants. This is for the 1670-1675 MHz band auction, scheduled for October 30, 2002. See, notice with registration form [PDF]. Registration starts at 9:30 AM. The seminar begins at 10:00 AM. Location: FCC, 445 12th Street, SW, Room 8-C245.
10:00 AM - 3:00 PM. The FCC's Technological Advisory Council will hold a meeting. See, notice in Federal Register. Location: FCC, 445 12th St., SW., Room TW-C305.
10:00 AM. The Senate Judiciary Committee will hold a hearings to examine pending judicial nominations. Location: Room 226, Dirksen Building.
12:15 PM. The FCBA's Transactional Practice Committee will host a brown bag lunch. The topic will be FBI and CFIUS issues that arise in telecommunications transactions. The scheduled speakers are Richard Salgado (FBI) and Gay Sills and Jack Dempsey (CFIUS). RSVP to wendy @fcba.org. Location: FCC, 445 12th Street, SW, Room 8-B411.
6:00 - 8:00 PM. The FCBA will host a CLE seminar titled "The Wake-Up Call -- Telecommunications Policies One September Later". The scheduled speakers include Marsha MacBride (FCC Chief of Staff and Director of the FCC's Homeland Security Policy Council), Howard Waltzman (Counsel to House Commerce Committee), Owen Wormser (DOD Principal Director for Spectrum, Space, Sensors & C3), Mike Gallagher (NTIA), Jeffery Goldthorp (FCC Designated Federal Officer, Network Reliability and Interoperability Council). For more information contact Laura Phillips at 202 842-8891 or Lauren Van Wazer at 202 418-0030. RSVP to wendy @fcba.org. Location: Sidley Austin, Conference Room 6-E, 1501 K Street NW.
6:00 - 8:00 PM. The FCBA's Young Lawyers Committee will host an event titled Career Night.
TIME? The Trade Policy Staff Committee (TPSC) will hold a hearing on China's compliance with the commitments it made in connection with its accession to the WTO. See, USTR's notice in the Federal Register.
TIME? The FTC has scheduled a hearing in the matter of its administrative complaint against Rambus alleging anti competitive behavior in violation of Section 5 of the Federal Trade Commission Act (FTCA) in connection with its participation in a standard setting body for dynamic random access memory products. See also, FTC release. Location: FTC.
Day one of a two day Homeland Security Technology Expo hosted by the Department of Commerce's (DOC) Technology Administration and Bureau of Industry and Security (BIS). See, BIS notice. For more information contact 202 482-8321 or cheryl.mendonsa @ta.doc.gov. Location: DC Armory.
Deadline for the FCC to act on BellSouth's application to provide in region interLATA services in the states of Alabama, Kentucky, Mississippi, North Carolina, and South Carolina.
Thursday, September 19
8:00 AM. The U.S. Chamber of Commerce's National Chamber Litigation Center will host a press briefing on the upcoming term of the Supreme Court. Charles Cooper (Cooper & Kirk) and Carter Phillips (Sidley & Austin. A continental breakfast will be served. RSVP to 202 463-5337 or nclc @uschamber.com. Location: 1615 H Street, NW.
9:00 AM - 3:00 PM. Day three of a three day meeting of the Computer System Security and Privacy Advisory Board (CSSPAB). The agenda includes (1) discussion of a CSSPAB privacy report, (2) discussion of a CSSPAB baseline standards report, (3) updates on computer security legislation, (4) an update by the OMB on privacy and security issues, (5) an agency briefing on compliance with the Government Paperwork Elimination Act (GPEA), (6) and a discussion of DMCA issues. Location: GSA, 7th and D Streets, SW, 5700.
10:00 AM. The Senate Judiciary Committee will hold a business meeting. See, notice. Location: Room 226, Dirksen Building.
11:00 AM. The Cato Institute will host a panel discussion titled "Copy Fights: Can Politicians or Entrepreneurs Best Protect Intellectual Property?" The scheduled speakers are Rep. Howard Berman (D-CA), Gigi Sohn (Public Knowledge), Phil Corwin (Butera & Andrews), Troy Dow (MPAA), and James Miller (Smith College). Lunch will follow the program. See, notice. Location: Cato Institute, 1000 Massachusetts Ave., NW.
12:00 NOON. The Progress and Freedom Foundation (PFF) will host a luncheon panel discussion titled "The Future of Telecom". The participants will be Ivan Seidenberg (CEO of Verizon), Randolph May (PFF), Scott Cleland (Precursor Group), Blair Levin (Legg Mason Equity Research), and Brett Swanson (The Gilder Technology Report). To register, contact Rebecca Fuller at rfuller @pff.org or 202 289-8928. Location: Ronald Reagan Building, Pavilion Room, 1300 Pennsylvania Ave., NW.
2:00 PM. The Senate Judiciary Committee's Antitrust Subcommittee will hold an oversight hearing to examine the enforcement of the antitrust laws. Location: Room 226, Dirksen Building.
4:00 PM. Michael Birnhack (University of Haifa Faculty of Law) will give a lecture titled "The Denial of the Copyright Law / First Amendment Conflict" as a part of the GWU Law School Intellectual Property Workshop Series. For more information, contact Prof. Robert Brauneis at 202 994-6138. Location: Faculty Conference Center, 5th Floor Burns, 716 20th Street, NW.
6:00 - 8:00 PM. The FCBA's Young Lawyers Committee will host a Career Night for law students and new attorneys. FCC Commissioner Kevin Martin will participate. For more information, contact Yaron Dori at 202 637-5600 or ydori @hhlaw.com or Ryan Wallach at 202 429-4759 or rwallach @willkie.com. RSVP to Wendy @fcba.org. Location: Hogan & Hartson, 555 13th Street, NW.
Day two of a two day Homeland Security Technology Expo hosted by the Department of Commerce's Technology Administration and Bureau of Industry and Security (BIS). See, BIS notice. For more information contact Cheryl Mendonsa at 202 482-8321 or cheryl.mendonsa @ta.doc.gov. Location: DC Armory.
President Bush is scheduled to release a document that states a national strategy for cyber security.