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October 24, 2002, 9:00 AM ET, Alert No. 534.
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USTR Offers Recommendations to Japan
10/23. The Office of the U.S. Trade Representative (USTR) presented a document [49 pages in PDF] to Japan titled "Annual Reform Recommendations from the Government of the United States to the Government of Japan under the U.S. -- Japan Regulatory Reform and Competition Policy Initiative". The report offers detailed recommendations in a wide range of policy areas, including wireless communications, wireless services, broadband deployment, e-commerce, intellectual property protection, and privacy protection.

The report states that its recommendations are "designed to facilitate a return to sustainable growth and open markets in Japan." See also, USTR release.

While the report was presented to Japanese Senior Vice Minister for Foreign Affairs Toshimitsu Motegi by Deputy USTR Jon Huntsman, it has very little to do with traditional trade issues. Rather, it covers a wide range of regulatory issues. Also, some of the policy recommendations have either not yet been adopted in the U.S., are still hotly debated in the U.S., or are subject to pending legal challenges within the U.S.

E-Commerce. The document states that "Although Japan’s e-commerce market is one of the largest in the world, its tremendous potential for growth remains unfulfilled because the IT sector is fettered by regulatory and other barriers."

The USTR offers several recommendations, such as: "Remove existing barriers that impede B-to-B and B-to-C e-commerce; allow non-attorneys to provide mediation and arbitration services for profit; ensure that Japanese Government e-commerce guidelines remain flexible and appropriate for evolving changes in technology and the marketplace; increase private sector input at all stages of the IT policy making process."

Intellectual Property. The USTR also offers recommendations regarding protection of intellectual property rights: "Extend Japan's terms of copyright protection and strengthen the enforcement system against infringement; provide security for commerce in the digital age through strong anti- circumvention measures; implement an effective Government wide software asset management system."

The report recommends that Japan "Clarify the scope of anti- circumvention rules to provide a sufficient level of security for digital content."

The report recommends extending copyright terms "to life of the author plus seventy years for works generally, and to 95 years from publication for works for which the term is not based on a human life."

The report also recommends that Japan "Strengthen the enforcement system against intellectual property infringement by adopting a statutory damage system that will act as a deterrent against infringing activities, ensure that right holders are fairly compensated for the losses suffered by infringement, and free judicial resources from the costly and difficult burden of having to establish and calculate actual damages."

Privacy. The USTR recommends a "self-regulatory framework for privacy".

The report also contains six pages of itemized recommendations regarding telecom policy. The report also covers other industry sectors, including financial services, energy, medical, and healthcare. It also addresses competition policy.

Treasury Official Praises Korea's Policies and Tech Driven Economy
10/23. Under Secretary of the Treasury John Taylor gave a speech in Seoul, South Korea titled "The United States and the World Economy: Current Situation and Prospects". He praised Korean policies.

He stated that "Korea is an example of what other countries can achieve with the right policies. ... As Central Bank Governor Park Seung noted recently in a speech in Washington, DC, Korea has adopted a new economic paradigm: an open economy -- driven by knowledge and technology driven companies, and supported by a sound financial system. This is seen in the government’s reduced role in the financial sector, increasing unwillingness to intervene on behalf of inefficient corporations, efforts to improve the insolvency regime, and increasing openness to foreign investment."

He also stated that "History and experience provide ample evidence of the kinds of policies that deliver higher productivity growth and higher living standards. Sound fiscal policies and low inflation monetary policies are, of course, essential. But they are not enough. Pro growth legal and regulatory policies encourage business investment, innovation, and entrepreneurship." He also said the other important policies include "Investments in health and education", "lower marginal tax rates", "strong rule of law and intolerance of corruption", and "Free trade".

Taylor also addressed the ailing Japanese economy in a speech in Tokyo, Japan on October 22. He stated that "I see no reason why -- with the right policies -- Japan could not return to the ``3 percent plus´´ economic growth of the 1970s and 1980s. Getting monetary policy and banking policy right is essential to restoring economic growth in Japan, and that is why I want to concentrate on them today." He said that "non-performing loans problems at the banks are still a serious problem and must be quickly addressed".

More News
10/23. The Federal Communications Commission (FCC) stated in a release [PDF] that it has released revised instructions for completing the FCC Form 471 application for e-rate subsidies. Forms are available at the Schools and Libraries Forms page. However, the latest Form 471 instructions is still the one dating from November 2001.

10/23. The Internet Corporation for Assigned Names and Numbers (ICANN) published in its web site the October 23 draft of its "Proposed New Bylaws Recommended by the Committee on ICANN Evolution and Reform".

10/23. EMC Corporation announced in a release that the U.S. District Court (MDNC) issued a permanent injunction against Triangle Technology Services "prohibiting the company from using certain EMC copyrighted software and trade secrets related to EMC's service business. Triangle was using EMC's copyrighted maintenance software, training materials, engineering documents and other EMC intellectual property, without EMC's authorization."

10/23. Bruce Mehlman, of the Commerce Department's Technology Administration, gave a speech titled "Developing Digital Content & Rights Management". He spoke at a Heritage Foundation panel discussion titled "Pirates and Posses: The Battle Over Digital Copyright". He stated that "We need to pursue and punish violations of copyright that are clearly illegal. Here government needs to work aggressively to take down piracy rings, shut down illegal web sites and stop the most prolific file traders, as the Department of Justice is trying to do. We should actively tip the scales in the battle between ``free but illegal´´ content and legitimate services."

Greenspan Addresses Productivity Gains and Technological Innovation
10/23. Federal Reserve Board Chairman Alan Greenspan gave a speech in Washington DC in which he addressed recent gains in productivity, the nature of productivity growth, and the role played by technological innovation, including advances in computing, networking, and communications.

He began by noting that there was a huge increase in productivity (aka increase in nonfarm business output per hour) in the past year, even though overall economic growth was modest. He said that the FRB and others are "struggling to account for so strong a surge". He used this speech to offer some explanation. In so doing, he referred to the role of computing, networking and communications.

Alan GreenspanOne point he made was that some companies have increased their productivity by acquiring equipment from failed dot-coms. He stated that "with margins under pressure, businesses effectively have been reorganizing work processes and re-allocating resources so as to use them more productively. Moreover, for capital with active secondary markets, such as computers and networking equipment, productivity may also have been boosted by a reallocation to firms that could use the equipment more efficiently. For example, healthy firms reportedly have been buying equipment from failed dot-coms."

Greenspan also focused on the role of innovation in productivity gains. He said that "Our nation has had previous concentrated bursts of technological innovation. In those instances, business practices slowly adapted to take advantage of the new technologies. The result was an outsized increase in the level of productivity spread over a decade or two, with unusually rapid growth rates observed during the transition to the higher level."

He continued that "Arguably, the pickup in productivity growth since 1995 largely reflects the ongoing incorporation of innovations in computing and communications technologies into the capital stock and business practices."

He also suggested that technological related productivity gains are likely to continue. He said that "the transition to the higher permanent level of productivity associated with these innovations is likely not yet completed. Surveys of purchasing managers in recent quarters consistently indicate that an appreciable share reports that their firms still have a considerable way to go in achieving the desired efficiency from the application of technology to supply management."

He also said that "Further evidence that firms still have not fully adapted their operations to the latest state of technology also is provided in a recent study that attempts to measure the ``technological gap´´ -- that is, the difference between the productivity of leading -- edge capital and the average productivity embodied in the current capital stock. This gap is estimated to be quite wide currently, which suggests that there are still significant opportunities for firms to upgrade the quality of their technology and with it the level of productivity."

Bush Advocates Senate Passage of Bill Regarding Computer Generated Images
10/23. The White House press office issued a release that states that President Bush "called on the Congress to pass the Child Obscenity and Pormography Prevention Act. This bill, which has already passed the House, makes it illegal for child pormographers to disseminate obscene, computer generated images of children." The release also states that "the Bush Administration is working aggressively to fight child exploitation and child pormography on the Internet."

Other administration officials have announced the administration's support for this bill in the past. See, for example, the prepared text of a speech by Attorney General John Ashcroft on October 2. See also, prepared testimony of Michael Heimbach, Unit Chief for the FBI's Crimes Against Children Unit, for a House Crime Subcommittee hearing on May 1, 2002.

The House passed this bill, HR 4623, on June 25 by a vote of 413-8. See, Roll Call No. 256.

However, the Democratic led Senate has not passed the bill. Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee, derided the bill at hearing earlier this month as a "quick fix" that will not withstand constitutional scrutiny. See, opening statement.

The next election is twelve days away.

This bill, which is sponsored by Rep. Lamar Smith (R-TX), is a reaction to the Supreme Court's April 16, 2002, opinion [PDF] in Ashcroft v. Free Speech Coalition, in which the Court held unconstitutional on First Amendment and overbreadth grounds provisions of the Child Pormography Prevention Act of 1996 (CPPA) banning computer generated images depicting minors engaging in sezually explicit conduct.

The CPPA expanded the federal prohibition on child pormography to encompass new technologies. 18 U.S.C. § 2256, the section containing definitions, was amended to provide that child pormography means "any visual depiction, including any photograph, film, video, picture, or computer or computer- generated image or picture, whether made or produced by electronic, mechanical, or other means, of sezually explicit conduct, where (A) the production of such visual depiction involves the use of a minor engaging in sezually explicit conduct; (B) such visual depiction is, or appears to be, of a minor engaging in sezually explicit conduct; (C) such visual depiction has been created, adapted, or modified to appear that an identifiable minor is engaging in sezually explicit conduct; or (D) such visual depiction is advertised, promoted, presented, described, or distributed in such a manner that conveys the impression that the material is or contains a visual depiction of a minor engaging in sezually explicit conduct;"

This bill amends § 2256(8)(B) to read "such visual depiction is a computer image or computer- generated image that is, or is nearly indistinguishable ... from, that of a minor engaging in sezually explicit conduct". However, the bill also provides that "it shall be an affirmative defense to a charge of violating this section that the alleged offense did not involve the use of a minor or an attempt or conspiracy to commit an offense under this section involving such use."

That is, the bill shifts the burden of proving that an image is computer generated to the defendant. The distinction is critical. DOJ officials have stated that prosecutors often cannot prove beyond a reasonable doubt that images are not computer generated, thus enabling defendants to escape conviction.

See also, story titled "House Subcommittee Holds Hearing on Computer Generated Porm" in TLJ Daily E-Mail Alert No. 423, May 2, 2002, and story titled "House Judiciary Committee Supports Ban on Computer Generated Child Porm" in TLJ Daily E-Mail Alert No. 454, June 19, 2002.

Editor's Note: TLJ intentionally misspells words that have caused subscribers' e-mail filtering systems to block delivery of the TLJ Daily E-Mail Alert.

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Thursday, October 24
The Senate will meet at 10:30 AM in pro forma session only.

11:00 AM - 12:00 NOON. The Department of Commerce's (DOC) National Institute of Standards and Technology (NIST) and the National Federation of the Blind (NFB) will host an event to announce and demonstrate a prototype technology that allows blind people to use electronic images and graphics. The participants will include Deputy Commerce Secretary Sam Bodman and NFB President Marc Maurer. See, NIST release. Location: NFB HQ, 1800 Johnson St., Baltimore, MD.

12:15 PM. The FCBA's Cable Practice Committee will hold a brown bag lunch. The speaker will be Susan Eid, Legal Advisor to FCC Chairman Michael Powell. RSVP to Wendy Parish. Location: NCTA, 1724 Mass Ave., NW.

12:15 PM. The FCBA's Young Lawyers Committee will hold a brown bag lunch. The topic will be "The Role of Industry Associations in Advocacy at the FCC and Congress". The speakers will include Mike Altschul (CTIA), Dan Brenner (NCTA), and others. RSVP to rwallach Location: Willkie Farr & Gallagher, 1875 K St., NW, 2nd Floor.

3:00 PM. Jessica Litman (Wayne State University Law School) will present a draft of a paper titled "Digital Networks in the Public Domain". The lecture is sponsored by the George Washington University (GWU) Law School's Dean Dinwooodey Center for Intellectual Property Studies. For more information, contact Prof. Robert Brauneis at 202 994-6138 or by email. Location: GWU Law School, Burns Building, 5th Floor, Faculty Conference Center, 720 20th St., NW.

3:30 PM. Gideon Parchomovsky will give a lecture titled "Toward an Integrated Theory of Intellectual Property". For more information, contact Prof. Julie Cohen at jec@law. Location: Georgetown University Law Center, Faculty Lounge, 600 New Jersey Ave., NW.

6:00 - 8:00 PM. The FCBA's will host an Oktoberfest reception featuring the FCC's Bureau Chiefs.

Friday, October 25.
8:00 AM - 3:15 PM. The National Science Foundation's Advisory Committee for Computer and Information Science and Engineering will hold a meeting. For more information, contact Gwen Blount at 703 292-8900. See, notice in Federal Register, October 8, 2002, Vol. 67, No. 195, at Page 62834. Location: Hilton Arlington and Towers, Master Ballroom, 950 N. Stafford Street, Arlington, VA.

10:00 AM - 12:30 PM and 2:00 - 4:00 PM. The FTC and the DOJ's Antitrust Division will hold the final workshops in their joint series titled "Competition and Intellectual Property Law and Policy in the Knowledge Based Economy" on October 25 and 30 and November 6. The October 25 event is titled "Competition, Economic, and Business Perspectives on Patent Quality and Institutional Issues: Competitive Concerns, Prior Art, Post Grant Review, and Litigation". Location: FTC, Room 432, 600 Pennsylvania Ave., NW.

Deadline for the DOJ's Antitrust Division to release its evaluation of 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.

Monday, October 28
The Senate will meet at 10:30 AM in pro forma session only.
Tuesday, October 29.
TIME? The Securities and Exchange Commission (SEC) will hold a full day hearing on issues relating to the structure of the U.S. equity securities markets. The SEC stated in a release that the topics will include "the collection, consolidation and dissemination of market data through intermarket plans; broker dealers' duty of best execution and corresponding marketplace rules relating to intermarket access, trade throughs, and price protection; the role of national securities exchanges, electronic communications networks (ECNs), and alternative trading systems; and the self regulatory system". Location: SEC.

8:45 AM - 3:45 PM. The National Institute of Standards and Technology's (NIST) Advanced Technology Program (ATP) Advisory Committee will hold a partially closed meeting. The agenda includes a review of ATP policy, organization, and budget, and an update from an international community panel on technology programs. Pre-registration is required to attend; contact Carolyn Peters by Thursday, October 24, at carolyn.peters or 301 975-5607. See, notice in Federal Register. Location: NIST, Administration Building, Lecture Room B, Gaithersburg, MD.

12:15 PM. The FCBA's Common Carrier Committee will host a brown bag lunch. The speaker will be Bill Maher, Chief of the FCC's Wireline Competition Bureau. Location: Willkie Farr & Gallagher, 1875 K Street, 2nd Floor, NY conference Room.

Deadline for the DOJ's Antitrust Division to release its evaluation of 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.

Wednesday, October 30
POSTPONED TO APRIL 30, 2003. The FCC will hold Auction No. 46. This is the 1670-1675 MHz band auction. See, notice of postponement in Federal Register, October 10, 2002, Vol. 67, No. 197, at Pages 63095 - 63096.

9:00 AM - 12:00 NOON. The Telecommunications Service Priority (TSP) System Oversight Committee will hold a meeting. The agenda includes TSP/WPS program update, TSP sponsorship policies, and OSS concept. For more information, contact Deborah Bea at 703 607-4933. See, notice in the Federal Register. October 11, 2002, Vol. 67, No. 198, at Page 63452. Location: National Communications System (NCS), second floor conference room, 701 South Court House Road, Arlington, VA.

10:00 AM - 12:00 NOON and 2:00 - 4:00 PM. The FTC and the DOJ's Antitrust Division will hold the final workshops in their joint series titled "Competition and Intellectual Property Law and Policy in the Knowledge Based Economy" on October 25 and 30 and November 6. The October 30 event is titled "Competition, Economic, and Business Perspectives on Substantive Patent Law Issues: Non-Obviousness and Other Patentability Criteria". Location: FTC, Room 432, 600 Pennsylvania Ave., NW.

12:00 NOON. Deadline to submit comments to the Office of the U.S. Trade Representative (USTR) regarding the acts, policies, and practices of trading partners of the U.S. that are relevant to the decision as to whether they should be identified under Section 182 of the Trade Act of 1974 (19 U.S.C. § 2242). Section 182, which is commonly referred to as the "Special 301" provisions in the Trade Act, requires the USTR to identify 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 also requests comments on the U.S. Government's 1998 Memorandum of Understanding with Paraguay on intellectual property matters, including enforcement. See, notice in the Federal Register

12:30 PM. The FCBA's Online Communications Committee will hold a brown bag lunch. The topic will be the role of ISPs in security and law enforcement compliance. The speakers will be Christopher Bubb (AOL Time Warner) and Betty Ellen Shave (Associate Chief for International Matters, Computer Crime and Intellectual Property Section, Department of Justice. Location: Cole Raywid & Braverman, 1919 Pennsylvania Ave., NW, No. 200.

EXTENDED TO DECEMBER 6. Deadline to submit comments to the FCC in response to its Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Copy Protection". This NPRM proposes that the FCC promulgate a broadcast flag rule, and seeks comment on this, and related questions. This is MB Docket No. 02-230. See also, FCC release [PDF]. See also, Order [PDF] of October 11, 2002 extending deadlines.