| Correction |
| 10/8. Yesterday's issue of the TLJ Daily E-Mail Alert (No.
525, October 7, 2002) included a story titled "House
Votes to Delay Webcasting Rule for Six Months". The story
stated that the House passed HR 5469,
the Small Webcaster Amendments Act of 2002, by a voice vote.
The story also incorrectly stated that the House passed the
bill as introduced on September 26. In fact, the House passed
a manager's amendment to the bill that is significantly
different from the original version. The original bill simply
provided for a six month extension of the effective date of
the Librarian of Congress's webcasting rule. The bill as
passed, among other things, establishes royalty rates for
small webcasters. |
|
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| House Passes Small
Webcaster Amendments Act of 2002 |
10/8. The House approved a manager's amendment to HR 5469,
the Small Webcaster Amendments Act of 2002, by a voice vote,
on October 7.
Rep. James
Sensenbrenner (R-WI), the Chairman of the House Judiciary
Committee, spoke in the House during the debate on the
bill. He is also the sponsor of the bill. The version of the
bill that passed the house was his "manager's
amendment".
Rep. Sensenbrenner explained the developments that led up to
his manager's amendment. He stated that "the 1995 Digital
Performance Right and Sound Recording Act that created a
performance right in sound recordings for digital
transmissions did not specifically address the issue of
webcasting or Internet radio broadcasts. As a result, the 1998
Digital Millennium Copyright Act contains provisions that
authorize eligible webcasters to accept a compulsory license,
thereby enabling them to operate over the Internet without
negotiating licenses in the marketplace. A compulsory license
essential allows an individual or entity to use copyrighted
works like music and movies at an industry negotiated or
government mandated rate."
Rep. Sensenbrenner said that "Because webcasters and
members of the recording industry could not agree to a rate, a
statutorily authorized arbitration panel, called a CARP, was
convened at the U.S.
Copyright Office to determine what the rate would be. The
arbitrators issued a decision on February 20, 2002. The
copyright holders in the recording industry thought that the
rate was too low, and the webcasters thought that the rate was
too high."
He continued that "the Librarian of Congress, based upon
a recommendation by the Register of Copyrights, decided on
June 8 to reject the suggestions of the webcasting CARP. On
June 20, he issued a final decision which lowered the rate
further. Some webcasters believe that the rate is still
excessive. The copyright holders maintain that this lower rate
is even less reflective of a fair market standard. That
decision is now on appeal" to the U.S. Court of Appeals (DCCir).
On June 20, 2002, the Librarian of Congress issued his final
rule providing the terms for the statutory license for
eligible nonsubscription services to perform sound recordings
publicly by means of digital audio transmissions, also known
as webcasting, pursuant to 17 U.S.C.
§ 114, and to make ephemeral recordings of sound
recordings for use of sound recordings under the statutory
license set forth in 17 U.S.C.
§ 112.
The Librarian also released a summary
stating that he "accepted the recommendation of the
Register of Copyrights and rejected the rates and terms
recommended by a Copyright
Arbitration Royalty Panel (CARP) ... The most significant
difference between the CARP's determination and the
Librarian's decision is that the Librarian has abandoned the
CARP's two tiered rate structure of 0.14¢ per performance for
``Internet only´´ transmissions and 0.07¢ for each
retransmission of a performance in an AM/FM radio broadcast,
and has decided that the rate of 0.07¢ will apply to both
types of transmission."
Rep. Sensenbrenner also stated that "Although a
resolution to this dispute is legally in play, implementation
of the decision by the Librarian takes effect on October 20
and is retroactive to 1998. Unless Congress acts, some
webcasters will shut down. This explains the point of H.R.
5469 as originally drafted: to suspend the implementation of
the Librarian's decision for 6 months, effective October 20.
This delay would ensure that all parties would receive all of
the judicial process to which they are entitled under the law
before the rate took effect."
He also explained his legislative strategy: "I am happy
to report that introduction of this bill placed a burr under
the saddle of both the copyright holders and the small
webcasters to conclude negotiations on these matters that
began last summer. Since last week, the parties have
negotiated around the clock. They have now arrived at a deal
that sets new rates and payment terms that will obviate the
need for further legal and administrative intervention. The
manager's amendment simply codifies the terms of that
deal." Rep. Sensenbrenner's statement is at Congressional
Record, October 7, 2002, pages H7046-7.
Rep. Howard Berman
(D-CA), the ranking Democrat on the House Courts, Internet and
Intellectual Property Subcommittee, spoke in favor of the
manager's amendment. He explained that "The terms of the
deal are somewhat complicated, but the basic provisions are
this. Small webcasters pay webcasting royalties that equal 8
percent of their gross revenues for the years 1998 through
2002, or a statutory minimum, whichever is greater. In 2003
and 2004, small webcasters will pay the greater of 10 percent
of their gross revenues under $250,000 and 12 percent of their
gross revenues over $250,000, or 7 percent of expenses."
Rep. Berman added that "The criteria for eligibility as a
small webcaster are reasonable and allow such webcasters to
grow and yet still obtain the royalty discount provided by the
legislation. A webcaster will be eligible for the discounted
royalty rate for the past 4 years if it had less than $1
million in gross revenues over those four years. A webcaster
will be eligible in the year 2003 if it has gross revenues
under $500,000 for that calendar year and in 2004 if it has
gross revenues under $1.25 million." His statement is at Congressional
Record, October 7, 2002, page H7047.
He concluded that "this legislation provides small
webcasters with much better terms than the webcasting rates
set by the Librarian of Congress. As such, it addresses the
concerns that the Librarian's rate might drive many small
webcasters out of business."
The manager's amendment also provides for the direct payment
to artists of royalties for digital performance of sound
recordings. It also requires the Register of Copyrights and
the Comptroller General to prepare a report for the Congress
on small webcasters by June 1, 2004.
Rep. John Conyers
(D-MI), the ranking Democrat on the Judiciary Committee, and Rep. Karen McCarthy
(D-MO), also spoke in favor of the bill. It then passed by a
voice vote. |
|
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| Senate Passes Conference
Report on DOJ Authorization Bill |
10/3. The Senate passed the conference report on HR 2215,
the 21st Century Department of Justice Appropriation
Authorization Act, by unanimous consent on Thursday, October
3. The House passed the conference report on September 26, by
a vote of 400-4. See, Roll
Call No. 422. The bill does far more than authorize the Department of Justice (DOJ).
It is also the vehicle for passage of numerous tech related
items.
The bill contains numerous substantive provisions. It requires
the DOJ to annually report certain information to the Congress
regarding use of the Carnivore e-mail surveillance system. It
changes the procedure for serving certain search warrants upon
ISPs. It modifies the process for extending H1B visas for high
tech workers. It amends the Copyright Act to facilitate
distance learning (TEACH Act). It amends the Patent Act
regarding inter partes reexamination, and other matters. It
also it includes the Madrid Protocol Implementation Act.
The bill had been delayed in the Senate for one week by
disputes over procedure. Sen.
Patrick Leahy (D-VT) stated in the Senate on October 1
that "there is a Republican hold" on the bill. Sen. Jon Kyl (R-AZ) also
spoke in the Senate on October 1. He stated that "It is
not that this is a bad bill." Rather, he raises two
points. First, he said it is a matter of priorities. He said
that the Senate should not devote time to this bill when it
had yet to pass a bill creating a new Department of Homeland
Security, a resolution authorizing the use of force against
Iraq, and a Department of Defense appropriations and
authorization bill. Second, he said that conference reports
are supposed to iron out differences between two versions of a
bill, and not serve as a vehicle for passage of items not
addressed in the original bills.
On October 3 the Senate voted on a cloture motion to cut off
debate on the bill. Once it became apparent during the vote
that the motion would pass, almost all Senators switched their
votes to support for the motion. It passed by a vote of 93-5.
See, Roll
Call No. 229. |
|
|
|
| Deputy Treasury Secretary
Addresses FSC/ETI and WTO Rulings |
10/8. Kenneth
Dam, Deputy Secretary of the Treasury, gave a speech
titled "Current WTO Induced Issues in U.S. Taxation of
International Business" at a Washington DC luncheon. He
said the American international tax rules no longer serve the
national interest, and cited as an example the problems
created for American businesses by the World Trade Organization's (WTO)
recent rulings that both the Foreign Sales Corporation (FSC)
and Extraterritorial Income Exclusion (ETI) tax regimes are
illegal.
He offered a gloomy short term outlook for American exporters.
He said that "The chances of going back to a FSC look
alike law are nil." Moreover, he said that "it will
not be possible to replicate for each and every American
company the tax relief they obtained under FSC or ETI. Nor can
we assure each and every American company that it will receive
any tax relief at all from the tax legislation now being
considered in Congress."
He said that instead "We need to focus on making the U.S.
economy -- and that means U.S. enterprises as a whole --
better off as a result of the legislative changes."
However, he did not say what such a future tax regime should
be, or when it might be enacted.
The WTO has held that both of the FSC and ETI tax regimes
constitute illegal trade subsidies. On August 30 the WTO
released a Decision
of the Arbitrator [46 pages in PDF] that authorizes the EU
to impose $4 Billion in countermeasures, or retaliatory
tariffs. On September 13 the European Union published a document
[14 pages in PDF] that lists thousands of product category
numbers that identify products that may be subject to
retaliatory tariffs. It includes many tech products. Moreover,
tech companies that export software and equipment have been
leading beneficiaries of the FSC and ETI tax regimes.
 Dam (at right) stated that "The sad
truth is that our international tax rules no longer serve our
national interest. In this age of globalization, international
transactions generate a large and growing share of our
national income. Yet changes to the international provisions
of the U.S. corporate tax code in recent decades have ignored
this trend, and have oftentimes more impaired than improved
American companies' ability to compete abroad. More often,
changes to the tax code have focused on increasing tax
revenues rather than assuring the competitiveness of U.S.
business operations, and thus, assuring the health of our
economy."
Dam said that the WTO rulings "say that any attempt to
replicate the benefits of FSC or ETI is legally doomed.
To make such an attempt would simply lead to fruitless WTO
litigation and could well bring on a trade war with the
European Union, which would almost certainly insist on
retaliating against U.S. exports." He also reiterated
that "President Bush decided several months ago that the
United States would comply with the WTO ruling".
Dam said that "we need to revisit the U.S. tax rules for
foreign earned income. These rules have not kept pace with the
rules of our major trading partners." He added that
"with today's global economy, the bottom line is clear.
If we want U.S. businesses, and thus the U.S. economy, to be
competitive in international transactions, then we have to
reconsider our international tax rules." |
|
|
| SEC Brings Insider Trading
Case Against Software Exec |
10/7. The Securities and
Exchange Commission (SEC) filed a civil complaint
in U.S. District Court
(NDIll) against Terry Kirch alleging insider trading.
The complaint states that Kirch was the CEO of a private
software company that belonged to an executive roundtable. The
executives met with the understanding that information
exchanged was confidential. At one conference the CEO of
another member, ShowCase Corporation, stated that his company
would not meet analysts' projections for the second quarter.
Kirch then sold shares of ShowCase, thereby avoiding a loss of
about $45,688. The complaint alleges violations of
§ 10(b) of the Exchange Act and § 17(a) of the
Securities Act.
The SEC seeks an injunction, disgorgement, interest, and a
civil penalty. See, SEC
release. |
|
|
| More News |
10/8. The Federal
Communications Commission (FCC) published a notice
in the Federal Register regarding whether it should revise,
clarify or adopt any additional rules in order to more
effectively carry out Congress's directives in the Telephone
Consumer Protection Act of 1991 (TCPA). The notice states that
"New technologies have emerged that allow telemarketers
to better target potential customers and make it more cost
effective to market using telephones and facsimile machines.
These new telemarketing techniques have also increased public
concern about the effect on consumer privacy. Therefore, we
seek comment on whether to revise or clarify our rules
governing unwanted telephone solicitations and the use of
automatic dialing systems, prerecorded or artificial voice
messages, and telephone facsimile machines." It adds that
"Such calls may also be disruptive to the increasing
number of individuals who now work from home by tying up
telephone lines or disconnecting telecommuters from the
Internet." Comments are due November 22, 2002. Reply
comments are due December 9, 2002. See, Federal Register,
October 8, 2002, Vol. 67, No. 195, at Pages 62667 - 62681.
10/8. The Senate
Judiciary Committee held over consideration of S
2541, the Identity Theft Penalty Enhancement Act of 2002,
sponsored Sen. Dianne
Feinstein (D-CA). It had been on the agenda for the
Committee's October 8 business meeting. All bills on the
agenda were held over. This was likely the Committee's last
business meeting to the 107th Congress.
10/7. Rep. Chris Cox
(R-CA) introduced HJRes 116, a joint resolution to recognize
the rights of consumers to use copyright protected works. It
was referred to the House
Judiciary Committee and the House Commerce
Committee.
10/7. Sen. Bill Nelson
(D-FL) introduced S 3064,
the Health Records Confidentiality Act of 2002. It was
referred to the Senate
Health, Education, Labor, and Pensions Committee. Sen.
Nelson stated that "Under my legislation, pharmacies,
insurance companies and other health entities would be
prohibited from using private, personally identifiable health
information to provide marketing services to any entity
without providing notice to the consumer about its disclosure
practices and obtaining the consumer's express written
consent. The legislation makes an exception for treatment
communications unless the covered entity receives direct or
indirect remuneration from a third party for making the
communication. The free flow of information is important when
sought by the consumer, but treatment communications tarnished
by the marketing dollars of third parties create an inherent
conflict of interest by encouraging patients, who don't know
their pharmacist has been paid, to purchase high cost
alternative drugs that are not necessarily more effective than
those prescribed by their doctor." See, Cong. Record,
October 7, 2002, at S10046.
10/8. The Supreme
Court heard oral argument in FCC v. Nextwave, Case No.
01-653, and Arctic Slope Corp. v. Nextwave, Case No. 01-657.
10/4. The U.S. District Court (WDWash)
sentenced Vasily Gorshkov to serve 36 months in prison
following convictions 20 counts of conspiracy, various
computer crimes, and fraud. The U.S. Attorneys Office (WDWash)
stated that he "was one of two men from Chelyabinsk,
Russia, who were persuaded to travel to the United States as
part of an FBI undercover operation. The operation arose out
of a nationwide FBI investigation into Russian computer
intrusions that were directed at Internet Service Providers,
e-commerce sites, and online banks in the United States. The
hackers used their unauthorized access to the victims'
computers to steal credit card information and other personal
financial information, and then often tried to extort money
from the victims with threats to expose the sensitive data to
the public or damage the victims' computers. The hackers also
defrauded PayPal through a scheme in which stolen credit cards
were used to generate cash and to pay for computer parts
purchased from vendors in the United States." See, USAO
release and CCIPS
release. |
|
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| About Tech Law Journal |
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Privacy
Policy
Notices
& Disclaimers
Copyright 1998 - 2002 David Carney, dba Tech Law Journal. All
rights reserved. |
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| Wednesday, October 9 |
The House will meet at 10:00 AM for legislative business.
The Supreme Court
will hear oral argument in Eldred v. Ashcroft, Case No.
01-618.
Day one of a two day symposium titled "The Rule of Law
in the Information Age: Reconciling Private Rights and Public
Interest" hosted by the Catholic
University of America School of Law. See, schedule.
Location: CUA, Walter Slowinski Court Room.
10:00 AM. The House
Commerce Committee's Subcommittee on Commerce, Trade, and
Consumer Protection will hold a hearing titled "Telecommunications
and Trade Promotion Authority: Meaningful Market Access Goals
for Telecommunications Services in International Trade
Agreements". The scheduled witnesses include Leonard
Waverman (London Business School), Larry Darby (Darby
Associates), Scott
Harris (Harris
Wiltshire & Grannis), Gregory Sidak (American Enterprise Institute),
and Florizelle Liser (Asst. USTR
for Industry and Telecommunications). Web cast. See, notice.
Location: Room 2322, Rayburn Building.
10:00 AM. The Senate
Commerce Committee's Subcommittee on Technology,
Terrorism, and Government Information will hold a hearing on
new laws implemented by the Administration in the fight
against terrorism. Location: Room 226, Dirksen Building.
10:00 AM. The U.S. Court of
Appeals (FedCir) will hear oral argument in Northrop
Grumman v. Intel, No. 02-1024. Location: Courtroom 402,
717 Madison Place, NW.
Day two of a three day public workshop hosted by the FTC
to "explore how certain state regulations and private
business practices may be having significantly anticompetitive
effects on e-commerce". See, FTC release.
Location: FTC, 600 Pennsylvania Ave., NW.
TIME? The Federal Accounting
Standards Advisory Board (FASAB) will meet to "obtain
information from interested individuals, organizations, and
groups about potential future projects". For more
information, contact Charles Jackson at 202 512-7352. See, notice
in Federal Register.
Deadline to submit comments to the FCC regarding SBC's Section 271 application
with the FCC to provide in region interLATA service in the
state of California. This is WC Docket No. 02-306. See, FCC
notice [PDF]. |
|
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| Thursday, October 10 |
The House will meet at 10:00 AM for legislative business.
9:00 AM. The House
Judiciary Committee's Subcommittee on the Constitution
will hold an oversight hearing titled "A Judiciary
Diminished is Justice Denied: the Constitution, the Senate,
and the Vacancy Crisis in the Federal Judiciary". Web
cast. Location: Room 2141, Rayburn Building.
9:30 AM. The FCC will hold a
meeting. The agenda
includes four items. First, the FCC will consider a NPRM
concerning the reform of the International Settlements Policy,
its international simple resale and benchmarks policy, and the
issue of foreign mobile termination rates. (IB Docket No.
96-261). Second, the FCC will consider a First Report and
Order regarding digital operation by terrestrial radio
broadcasters. (MM Docket No. 99-325). Third, the FCC will a
Forefeiture Order concerning compliance with the shared
transport condition of the SBC Ameritech merger order.
Finally, the FCC's Enforcement Bureau will report on recent
enforcement activities. Location: FCC, 445 12th Street, SW,
Room TW-C05 (Commission Meeting Room).
10:00 AM. The House
Science Committee will hold a hearing titled
"Conducting Research During the War on Terrorism:
Balancing Openness and Security." The scheduled witnesses
include John Marburger (Director of the White House Office of
Science and Technology Policy), Ronald Atlas (American Society
of Microbiologists), M.R.C. Greenwood (UC Santa Cruz), and
Sheila Widnall (MIT). See, notice.
Press contacts: Heidi
Tringe or Jeff
Donald at 202 225-4275. Location: Room 2318, Rayburn
Building.
12:00 PM. The Cato Institute
will host a book forum. Jagdish Bhagwati
(Columbia University) will discuss his book, Free
Trade Today, and a collection which he edited, Going
Alone: The Case for Relaxed Reciprocity in Freeing Trade.
Robert
Litan (Brookings) will comment. Webcast. Lunch will follow
the program. See, notice.
Location: Cato, 1000 Massachusetts Ave., NW.
3:00 PM. The House
Judiciary Committee's Subcommittee on Commercial and
Administrative Law will meet to mark up HR 5429,
the Satellite Services Act of 2002. Webcast. Location: Room
2141, Rayburn Building.
Day two of a two day symposium titled "The Rule of Law in
the Information Age: Reconciling Private Rights and Public
Interest" hosted by the Catholic University of America
School of Law. See, schedule.
Location: CUA, Walter Slowinski Court Room.
Day three of a three day public workshop hosted by the FTC
to "explore how certain state regulations and private
business practices may be having significantly anticompetitive
effects on e-commerce". See, FTC release.
Location: FTC, 600 Pennsylvania Ave., NW.
Day one of a two day Annual Update Conference on Export
Controls and Policy hosted by the Department of Commerce's
Bureau of Industry and
Security (BIS). See, agenda.
Location: to be announced.
Deadline to submit comments to the FCC regarding BellSouth's Section 271
application with the FCC to provide in region interLATA
service in the states of Florida and Tennessee. This is WC
Docket No. 02-307. See, FCC
notice [PDF]. |
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| Friday, October 11 |
The House will meet at 9:00 AM for legislative business.
Day two of a two day Annual Update Conference on Export
Controls and Policy hosted by the Department of Commerce's
Bureau of Industry and
Security (BIS). See, agenda.
Location: to be announced.
Deadline to submit comments to the FCC in response
to it Public
Notice [7 pages in PDF] regarding relief for the Auction
No. 35 winners. The FCC asks for public comments regarding two
possible scenarios for providing relief to the winning bidders
in the January 2001 re-auction of spectrum previously
auctioned to NextWave: full refund and option to dismiss all
pending applications, and selective opt out for pending
applications. See also, notice
in Federal Register. |
|
|
| Monday, October 14 |
| Columbus Day. The FCC will be closed. The National Press
Club will be closed. |
|
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| Tuesday, October 15 |
9:00 AM - 12:00 NOON. The U.S.
Patent and Trademark Office's (USPTO) Technology
Center 2800 will hold a Semiconductor Customer Partnership
Meeting to discuss the quality and timeliness of the
examination process. (2800 pertains to semiconductors,
electrical and optical systems and components.) RSVP to Tom
Thomas at tom.thomas @uspto.gov
or 703 308-2772. See, USPTO
notice. Location: Crystal Park 1, Suite 819, 2011 Crystal
Drive, Arlington, Virginia.
12:00 NOON. James
Rogan (Under Secretary of Commerce for Intellectual
Property and
Director of the USPTO) will
give an address titled "Reaffirming Intellectual
Property Rights in an Information Age". See, notice.
Location: Heritage
Foundation, 214 Massachusetts Ave., NE.
Day one of a two day conference of the Association Internationale pour
la Protection de la Propriété Intellectuelle (AIPPI)
titled "How to be Successful with Patent and Trademark
Litigation: Europe and the Far East". The agenda includes
a business meeting (1:00 - 1:30 PM), a CLE seminar (1:30 -
5:00 PM), and a reception (5:00 - 6:30 PM). Location: Faculty
Conference Room, Burns Building, 5th Floor, GWU Law
School, 716 20th Street, NW.
Deadline to submit comments to the FCC in response
to Qwest Communications' Section
271 application to provide in region interLATA service in
the states of Colorado, Idaho, Iowa, Montana, Nebraska, North
Dakota, Utah, Washington and Wyoming. This is WC Docket No.
02-314. See, FCC
release [PDF]. |
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