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January 13, 2003, 9:00 AM ET, Alert No. 581.
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District Court Squeezes Sharman on Internet Based Personal Jurisdiction
1/9. The U.S. District Court (CDCal) issued an order and opinion in MGM v. Grokster in which it denied Sharman Network's motion to dismiss for lack of personal jurisdiction. Sharman, which now owns the key assets of Kazaa, is organized in the offshore jurisdiction of Vanuatu, apparently for the purpose of evading the reach of U.S. courts. Sharman provides free software, known as the Kazaa Media Desktop (KMD), that can be downloaded and used to search for and exchange digital music, movies, and other mostly copyrighted works, using FastTrack file sharing technology. The Court based its finding of personal jurisdiction largely on the fact that Sharman had made the KMD software available to about two million residents of the state of California.

Introduction. This order and opinion is issued in two related actions, both pending in the same court, both alleging copyright infringement, and both against the same entities involved in facilitating the copying of copyrighted works over the Internet.

In one action, Metro Goldwyn Mayer Studios Inc. and other movie and music recording companies, filed a complaint against Grokster, Ltd and others involved in the exchange of copyrighted music, movies and other digital works over the Internet. These plaintiffs alleged copyright infringement in violation of 17 U.S.C. § 501. In the second action, Jerry Leiber, and other professional songwriters and music publishers, filed a complaint against Consumer Empowerment BV a/k/a FastTrack and others. Both suits involve essentially the same claims against the same defendants.

Kazaa BV was formerly know as Consumer Empowerment BV. Kazaa BV is a Netherlands Corporation. The Court opinion notes that after these complaints were filed, Kazaa "transferred ownership of key assets to the newly-formed  Sharman Networks, Ltd. ... Sharman is a company organized under the laws of the island nation of Vanuatu and doing business principally in Australia. The assets transferred to Sharman include the website and domain, and the Kazaa Media Desktop (``KMD´´) software." The Court concluded that "Sharman has acquired Kazaa BV's primary assets ... without having formally acquired the company. Meanwhile, Kazaa BV has apparently ceased defending this action."

The Court's opinion does not address Kazaa's and Sharman's reasons for structuring and locating in this manner. However, their actions are not inconsistent with the hypothesis that the purpose is to evade personal jurisdiction in U.S. courts, and seizure of assets in the event of an adverse judgment.

Sharman filed a motion to dismiss for lack of personal jurisdiction, and numerous other reasons. LEF Interactive Pty Ltd, another defendant, moved to dismiss solely for lack of personal jurisdiction. The Court denied both motions.

Facts. The Court first reviewed relevant facts. It wrote that "Although novel in important respects, the ``Kazaa system´´ operates in a manner conceptually analogous to the Napster system described at length by the district court in A&M Records, Inc. v. Napster, Inc., 114 F.Supp. 2d 896 (N.D.Cal. 2000)."

"In summary, Sharman provides free proprietary software, the Kazaa media Desktop, that enables Internet users to search for and exchange digital media with other users of file-sharing software powered by FastTrack technology. Sharman also operates the website, which serves as a central distribution and customer support hub for the KMD software."

The Court added that "The KMD software can be transferred to the user's computer, or ``downloaded,´´ from servers operated by Sharman (for instance, by visiting Sharman's website, or third-party CNET's, and choosing to download the software). Once installed, each KMD user may elect to ``share´´ certain files located on the user's computer, including, for instance, music files, video files, software applications, e-books, and text files. When launched on a user's computer, KMD automatically connects to the FastTrack peer-to-peer network, and makes any shared files available for transfer to any other user's computer." (Parentheses in original.)

The Court wrote that Sharman has had several types of contacts with the state of California. These include making its KMD software available to California residents, and the use of California agents (including an advertising firm). However, Sharman is not licensed or incorporated in California, and its has no offices, employees or assets there.

The Court also pointed out that "Because the KMD software itself is free, most of Sharman's revenue comes through its advertising partnerships."

Legal Analysis. The Court first briefly concluded that there is not general jurisdiction, because of Sharman's lack of presence in the state. The Court then analyzed at length (pages 11-34) the issue of specific jurisdiction.

The Court first wrote that the analysis must begin with the Due Process Clause, but that the inquiry is of a "somewhat nebulous nature". Citing Quill v. North Dakota and International Shoe v. Washington, it wrote that "the central due process inquiry remains whether an exercise of jurisdiction is ``consistent with traditional notions of fair play and substantial justice.´´"

The Court then reviewed the 9th Circuits two prong test of purposeful availment and relatedness. "Under prevailing Ninth Circuit doctrine, specific jurisdiction is presumptively reasonable where: 1) a nonresident defendant purposefully avails itself of the privilege of conducting activities in the forum state, thereby invoking the protections of its laws; and 2) the plaintiff's claims arise out of the defendants' forum-related activities."

The Court elaborated on the relatedness prong: "Contacts with a forum state are relevant for purposes of specific jurisdiction only if they are sufficiently related to the cause of action. The Ninth Circuit adopts a broad, ``but for´´ test of relatedness. ... Thus, if Plaintiffs' claims would have arisen notwithstanding certain contacts, those contacts are not relevant to the jurisdictional analysis."

The Court concluded that "Contacts with U.S. agents such as public relations representatives and lawyers, contacts respecting advertising relationships, and the use of a California company for counting downloads of Sharman's software, are simply not but for causes of the alleged infringement." However, the Court found that "In contrast, Sharman's distribution of the KMD software, and licensing of its use, are ``but for´´ causes of the alleged infringement. But for Sharman's acts in these regards, Plaintiffs' claims of direct infringement never would have arisen against Sharman."

The Court went on to conclude that Sharman's software distribution contacts also satisfy the purposeful availment prong of the test. "Here, there is little question that Sharman has knowingly and purposefully availed itself of the privilege of doing business in California. First, Sharman essentially does not dispute that a significant number of its users -- perhaps as many as two million -- are California residents. ... Second, Sharman does not dispute that the distribution of its software is an essentially commercial act."

"In sum, Sharman engages in a significant quantum of commercial contact with California residents constituting a but for cause of Plaintiffs' claims. Jurisdiction is therefore presumptively reasonable", wrote the Court.

The Court went on to add that there is an alternative basis for finding purposeful availment -- the effects test. That is, "purposeful availment may be demonstrated where the effects of a defendant's conduct are felt in the forum state." The Court citing the Supreme Court opinion in Calder v. Jones and the 9th Circuit opinion in Panavision v. Toeppen. "Thus, Plaintiffs have alleged that Sharman intentionally and materially contributed to the infringement of Plaintiffs' works, and that it did so with full knowledge that much of the harm from this infringement would be suffered in California. This is sufficient to establish a prima facie case of purposeful availment under the effects test of Panavision."

Finally, the Court wrote that even if the two prong test for finding personal jurisdiction is met, the exercise of jurisdiction must also be "reasonable". The Court found that it is. One key factor in this finding was that Sharman acquired the assets of Kazaa after Kazaa had already been sued for copyright infringement.

Sharman also moved to dismiss on other grounds, including venue, forum non conveniens, the political question doctrine, and extraterritoriality. The Court rejected each of these.

Finally, the Court rejected LEF Interactive's motion to dismiss for lack of personal jurisdiction (at pages 39-45). LEF is a management company that the Plaintiffs argued is an alter ego of Sharman. Plaintiffs argued that personal jurisdiction over Sharman may be imputed to LEF. The Court did not rule that the LEF is an alter ego for liability purposes, but found enough merger between the two to find personal jurisdiction over LEF based upon its finding of personal jurisdiction over Sharman.

Comments. Motion Picture Association of America (MPAA) and Recording Industry Association of America (RIAA) issued a joint statement in which they said that "We are pleased that the court denied the efforts of Sharman Networks and LEF to avoid being subject to the suit. Sharman Networks and LEF should be held accountable by U.S. laws, which clearly indicate that what they are doing is illegal, and that they should not profit from it. Their attempts to play an intricate and shameless shell game designed to evade a U.S. court's jurisdiction and avoid liability have rightly failed."

Related Cases. This case follows two other recent cases that address personal jurisdiction in the context of Internet activities. On December 10, 2002, the High Court of Australia issued its opinion in Dow Jones v. Gutnick, a case involving three procedural issues (jurisdiction, choice of law, and convenient forum) in a tort action brought in Australia for an allegedly defamatory news story published on the Internet by Dow Jones, a U.S. publisher. The Court held that because of publication on the Internet, the Australian courts have jurisdiction, that Australian law applies, and that the case should proceed in the trial court in the Australian state of Victoria. See, story titled "High Court Rules Australia Has Jurisdiction Over Dow Jones Based on Web Publication", TLJ Daily E-Mail Alert No. 564, December 10, 2002.

On December 13, 2002, the The U.S. Court of Appeals (4thCir) issued its opinion [12 pages in PDF] in Young v. New Haven Advocate, holding that a court in Virginia does not have jurisdiction over two small newspapers, and their editors and reporters, located in Connecticut, who wrote allegedly defamatory stories about a Virginia prison warden and published them on the Internet. The Court held that the web publication did not establish minimum contacts because the newspapers are not directed at a Virginia audience. See, TLJ story titled 4th Circuit Rules in Internet Jurisdiction Case.

House Organizational News
1/13. House Speaker Denny Hastert (R-IL) released a list of committee chairmen for the 108th Congress last week. Speaker Hastert also released a tentative list of Republican committee members for the 108th Congress.

Judiciary Committee. The House Judiciary Committee handles many technology related issues. Its Court, Internet and Intellectual Property (CIIP) Subcommittee has jurisdiction over patent, copyright, trademark and related issues. Its Crime Subcommittee has jurisdiction over cyber-crime bills. Its Commercial and Administration Law (CAL) Subcommittee has jurisdiction over bills to extend or make permanent the moratorium on new or discriminatory Internet taxes. Its Immigration Subcommittee has jurisdiction over H1B visas.

There will be Republican turnover on the Judiciary Committee. Former Rep. Lindsay Graham (R-SC) was elected to the Senate seat previously held by former Sen. Strom Thurmond (R-SC). He had also been a member of the CIIP Subcommittee. Former Rep. Bob Barr (R-GA) lost in the Republican primary after redistricting placed in the same district as another Republican incumbent. He had been Chairman of the CAL Subcommittee, and worked to secure passage of the bill extending the Internet Tax Freedom Act.

The tentative list of Republican committee assignments lists Rep. Darrell Issa (R-CA) as a member of the House Commerce Committee, but not the House Judiciary Committee. In the 107th Congress Rep. Issa was a member of the Judiciary Committee, and its CIIP Subcommittee, as well as the International Relations Committee. Rep. Issa has issued a release stating that he has been appointed to the Commerce Committee. However, it is silent on whether he retains any of his other committee assignments.

Rep. Darrell IssaThis could be a significant development. Rep. Issa (at right) is one of the few persons to have been elected to Congress with either a background in patenting, or electronics technology. He holds 36 consumer electronics patents, and has litigated to protect his intellectual property rights. He founded a company named Directed Electronics, which makes automobile convenience, audio and security products. He is also a former Chairman of the Consumer Electronics Association (CEA). His web site biography also states that during his army service "he worked as a bomb disposal technician, tank platoon commander, and a computer R&D specialist."

Rep. Issa has already introduced one bill in the 108th Congress to amend the Patent Act. On January 8, he introduced HR 242, the Plant Breeders Equity Act of 2003, a bill to amend 35 U.S.C. § 162. See, story below.

However, Rep. Issa's expertise would not go to waste on the Commerce Committee. The Commerce Committee, which has long been aggressive in asserting and expanding its jurisdiction, has been active on several intellectual property issues in recent Congresses. In the 105th Congress the Committee passed a bill pertaining to the rights of owners of databases. (The Judiciary Committee also passed a much different database protection bill.) The Commerce Committee is also increasingly addressing copyright issues involved in the broadcasting of copyrighted works. It is currently working with interested parties on promoting the transition to digital TV, which includes several copyright issues. It also oversees the Federal Communications Commission (FCC), which is currently conducting a rulemaking proceeding regarding the "broadcast flag".

The new Republican members of the Judiciary on the tentative list are all freshman: Rep. John Carter (R-TX), Rep. Marsha Blackburn (R-TN), Rep. Steven King (R-IA), and Rep. Tom Feeney (R-FL).

Rep. John CarterThe tentative appointment of Rep. Carter (at right) may be significant for some technology related issues. He is a retired state judge, which makes him an obvious candidate for appointment to the Judiciary Committee. However, his newly created 31st District is in the Austin, Texas area, and includes Round Rock and Williamson county. The Austin area is home to many technology companies. The largest employer in Round Rock is Dell Computers. Other leading employers in Round Rock include Cypress Semiconductor, Abbot Labs (pharmaceuticals), Sears (which has an Internet sales and customer call facility), and DuPont Photomasks (which makes photomasks, an enabling technology used in the manufacture of semiconductor and other microelectronic devices). See, list of leading employers in Round Rock, Texas.

Rep. Blackburn was elected from the 7th District in Tennessee, which stretches from the suburbs of Memphis to the suburbs of Nashville, the center of the country music industry. The district was previously represented by former Rep. Ed Byrant (R-TN), who made an unsuccessful run in the Republican Senate primary. Rep. Blackburn is a former state Senator.

Rep. Feeney is a former speaker of the Florida House. He represents the newly created 24th District in the Orlando, Florida area. Rep. King is a former state legislator elected from the Iowa 5th District.

Commerce Committee. The tentative list of Republican committee assignments also lists several changes in the membership of the House Commerce Committee. The new Republican members of the Committee will tentatively be Rep. Mike Ferguson (R-NJ), Rep. Mike Rogers (R-MI), Rep. Darrell Issa (R-CA), and Rep. Butch Otter (R-ID).

The members of the Committee who have left include former Rep. Greg Ganske (R-IA), who made an unsuccessful run for the Senate, former Rep. Ed Bryant (R-TN), who ran for Senator from Tennessee, but lost in the primary to now Sen. Lamar Alexander (R-TN), and former Rep. Bob Ehrlich (R-MD), who was elected Governor of Maryland. In addition, Rep. Tom Davis (R-VA), who was a member of the Committee, as well as its Telecom Subcommittee, in the 107th Congress, is not listed on the Republican's tentative committee membership list for the 108th Congress.

Rep. Issa Introduces Amendment to Plant Patent Act
1/8. Rep. Darrell Issa (R-CA) introduced HR 242, the Plant Breeders Equity Act of 2003, a bill to amend 35 U.S.C. § 162.

Rep. Issa released a statement that elaborated that "Prior to the USPTO change of policy, a plant variety could be sold outside the United States for an unlimited number of years without barring that variety from being patented as long as the variety was not sold, offered for sale or publicly used in this country for more than one year prior to its filing. In January 2001, without warning the USPTO examiners began rejecting US plant patent applications for varieties that had been offered for sale anywhere in the world more than one year before filing a plant patent application in the United States. Breeders' applications have been denied for hundreds of patents introduced abroad but not yet introduced in the U.S. This situation undermines innovation in the horticultural industries and deprives American growers and the public of the benefits of these new varieties."

The bill would provide that "No plant patent application shall be denied, nor shall any issued plant patent be invalidated, on the grounds that the invention was described in a printed publication to which section 102(b) of this title applies, unless the invention was described in a printed publication in this or a foreign country more than ten years prior to the date of the application for patent in the United States."

Rep. Issa was elected to Congress in 2000. He served on the House Judiciary Committee, and its Courts, the Internet, and Intellectual Property Subcommittee in the 107th Congress. Rep. Issa holds thirty-six patents that pertain to consumer electronics.

The bill is cosponsored by Rep. Sam Farr (D-CA), Rep. George Nethercutt (R-WA), and Rep. Marty Meehan (D-MA).

People and Appointments
1/12. AOL Time Warner announced in a release that "Steve Case has decided to step down as Chairman effective at the Annual Shareholders Meeting in May."

1/10. Phil Bond, who is currently both Chief of Staff to Commerce Secretary Don Evans and Under Secretary of Commerce for Technology will cease being Chief of Staff for Evans. He will work full time as head of the Technology Administration (TA). The new Chief of Staff to Evans will be Alison Kaufman. She is currently Chief of Staff to Deputy Commerce Secretary Sam Bodman. See, TA release.

1/10. President Bush announced his intent to nominate Michael Brown to be Under Secretary for Emergency Preparedness and Response at the Department of Homeland Security (DHS). He is currently the Deputy Director of the Federal Emergency Management Agency (FEMA). He was previously the Executive Director of the Independent Electrical Contractors. See, White House release.

1/10. President Bush nominated Clark Ervin to be Inspector General of the new Department of Homeland Security (DHS). He also nominated former Rep. Asa Hutchinson (R-AK) to be Under Secretary for Border and Transportation Security in the new DHS. See, White House release. The President's intent to make these nominations had previously been announced.

1/8. James Dempsey, who is currently Deputy Director of the Center for Democracy and Technology (CDT), will become its Executive Director, with responsibility for day to day operations and program implementation. He also focuses on privacy and electronic surveillance issues, and heads the CDT's international project, the Global Internet Policy Initiative (GIPI). Jerry Berman, who founded the CDT in 1994, will remain as President. Lara Flint will join the CDT to work on national security and civil liberties issues. She previously worked in the Washington DC office of the law firm of Jenner & Block. The Board of Directors also announced that the CDT will expand its scope to include digital copyright issues.

More News
1/10. The Department of Justice (DOJ) filed with the U.S. District Court (DC) a memorandum in opposition to the motion of the Consumers for Computing Choice (CCC) for leave to intervene to appeal in the government antitrust action against Microsoft. The DOJ also filed a memorandum in opposition to a similar motion filed by Robert Litan, an economist based in Washington DC. And, last week, the DOJ filed its memorandum in opposition to a substantially similar motion [25 pages in PDF] filed by the Computer & Communication Industry Association (CCIA) and the Software & Information Industry Association (SIIA). The basis of the opposition is the same for all motions. None of these people or groups is a party to the case, and therefore, they lack standing to appeal.

1/8. The Internet Corporation for Assigned Names and Numbers (ICANN) released a report titled "Fifth Status Report to the United States Department of Commerce Re: Progress Toward Objectives of Memorandum of Understanding – Q4 2002". See also, ICANN release.

1/10. President Bush signed into law HJRes 1, which provides further continuing appropriations for activities of the federal government through Friday, January 31, 2003. See, White House release.

11th Circuit En Banc Reverses Three Judge Panel in Reciprocal Compensation Case
1/10. The U.S. Court of Appeals (11thCir) issued its divided en banc opinion in BellSouth v. MCIMetro, a case regarding interconnection agreements, reciprocal compensation for calls to ISPs, state jurisdiction, and federal jurisdiction. The en banc Court concluded that a state telecom regulator has authority to construe interconnection agreements to determine whether calls to ISPs are local calls for the purpose of reciprocal compensation, that federal courts have jurisdiction to review these determinations, and that, in the present case, a three judge panel will hear the merits of an appeal from a District Court determination affirming a state regulator's orders construing such interconnection agreements. That is, the en banc panel resolved the jurisdictional questions. The case now goes back to a new three judge panel for resolution on the merits.

Background. Section 251(b)(5) of the 1996 Act provides that local phone companies compensate each other for handling each other's local calls. One telephone company pays another telephone company for each local call the second company completes to one of its customers.

If one person whose local phone company is the ILEC makes a local phone call to another person whose local phone company is a competitive local exchange carrier (CLEC), the CLEC is entitled to compensation from the ILEC for completing the call. The same is the case if the call originates with the CLEC and completes with the ILEC. Hence, it is called "reciprocal compensation."

Disputes have arisen in the context of calls made from ILEC customers to CLECs that provide Internet service. The CLECs request reciprocal compensation from the ILECs. The ILECs assert that these calls are not "local". ILECs, such as BellSouth, further argue that there is no reciprocity, because while people place calls to connect to the Internet, the Internet never calls them back.

This case involves disputes over reciprocal compensation. BellSouth and MCImetro entered into an interconnection agreement, as required by the Telecom Act of 1996. So did BellSouth and WorldCom. BellSouth then decided not to pay reciprocal compensation for calls to ISPs. MCImetro and WorldCom argued that calls made to an Internet Service Provider (ISP) are local traffic subject to reciprocal compensation under the interconnection agreements. BellSouth asserted that they are not.

GPSC Proceeding. MCImetro and WorldCom sought relief from the Georgia Public Service Commission (GPSC). The GPSC issued two orders construing these to interconnection agreements. It decided that the calls were local traffic.

District Court. BellSouth then filed a complaint in U.S. District Court (NDGa) alleging that the GPSC order was contrary to federal law. BellSouth alleged that subject matter jurisdiction was based upon both 47 USC §252(e)(6) and 28 USC §1331 (federal question jurisdiction). The District Court affirmed the GPSC.

Three Judge Panel of the 11th Circuit. BellSouth filed an appeal with the U.S. Court of Appeals (11thCir). A divided three judge panel of the Court of Appeals issued its opinion on January 10, 2002, reversing the District Court on jurisdictional grounds, rather than on the merits. The majority held that the GPSC had no statutory authority to interpret the interconnection agreements, and the District Court lacked jurisdiction. Judge Tjoflat wrote the opinion of the Court, and Judge Barkett dissented. He concluded that the District Court had jurisdiction under Section 252.

En Banc Opinion. MCImetro and WorldCom then petitioned for rehearing en banc, which petition was granted. In the just issued en banc opinion of the Court of Appeals, the Court concluded that the GPSC has authority under federal law to interpret and enforce the interconnection agreements at issue and that its determination is subject to review in the federal courts. The Court also referred "all other issues to a panel of this Court and instruct the Clerk of the Court to assign this case to the next available oral argument panel to resolve the merits of this case".

Judge Barkett (who dissented from the opinion of the three judge panel) wrote the opinion for the en banc panel. Judge Tjoflat (who wrote the opinion of the three judge panel) wrote an 60 page dissent to the opinion of the en banc panel.

FCC Seeks Comments on Cable TV Plug and Play MOU
1/10. The Federal Communications Commission (FCC) announced, but did not release, a Further Notice of Proposed Rulemaking (FNPRM) regarding a proposed set of rules pertaining to "plug and play" cable compatibility.

On December 19, fourteen consumer electronics companies and seven cable operators announced that they have entered into a Memorandum of Understanding (MOU) regarding a national plug and play standard between digital television (DTV) products and digital cable systems. See, document [78 pages in PDF] consisting of the MOU, proposed rules to be promulgated by the FCC, and a letter to FCC Chairman Michael Powell and others.

The FCC stated in a release [MS Word] that it adopted this FNPRM on January 7. Comments in response to this FNPRM are due by March 28, 2003. Reply comments are due by April 28, 2003. This is CS Docket 97-80, and PP Docket 00-67.

The FCC's release states that "proceeding seeks comment on proposed rules for ``plug and play´´ cable compatibility, which is a key piece of the digital television puzzle. In a ``plug and play´´ world, consumers will be able to plug their cable directly into their digital TV set without the need of a set-top box. On December 19, 2002, the cable and consumer electronics industries filed a Memorandum of Understanding (MOU) which details an agreement on a cable compatibility standard for an integrated, one-way digital cable television receiver, as well as other unidirectional digital cable products. The industries assert that unidirectional digital cable television receivers manufactured pursuant to the MOU would be capable of receiving analog basic, digital basic and digital premium cable television programming by direct connection to a cable system providing digital programming. Due to the unidirectional nature of this receiver specification, an external navigation device will still be needed to receive advanced features such as cable operator enhanced electronic programming guides, impulse pay per view or video on demand. The MOU indicates that the industries continue to work on a bidirectional receiver specification that would eliminate the need for an external navigation device to receive advanced services."

For more information, contact Susan Mort in the FCC's Media Bureau at 202 418-7200 or

Bush To Nominate McQueary for Science and Technology Position at DHS
1/10. President Bush announced his intent to nominate Charles McQueary to be Under Secretary for Science and Technology at the Department of Homeland Security (DHS). See, White House release.

McQueary is a recently retired President of General Dynamics, a defense contractor. Before that, he worked for AT&T/Lucent Technologies from 1987 through 1997, as President and Vice President. And before that, he worked for AT&T Bell Laboratories from 1971 through 1987. He is also a former member of the Board of Directors of the National Defense Industrial Association. He has three degrees, in engineering, mechanical engineering, and engineering mechanics, all from the University of Texas.

Rep. Sherwood Boehlert (R-NY), the Chairman of the House Science Committee, stated in a release that "I'm extremely pleased with this appointment and that the President has moved so rapidly. The Science Committee wrote the portion of the Homeland Security legislation creating the Undersecretary for Science and Technology and Dr. McQueary is exactly the kind of individual we hoped would fill this critical position. He has a strong technical background, broad management experience, familiarity with both academia and industry, and is highly regarded in the scientific community. I look forward to working with Dr. McQueary to ensure that the federal government invests in the science and technology necessary to combat terrorism over the long term."

The Homeland Security Act, which the Congress passed, and the President signed, late last year, creates two directorates, both headed by an Under Secretary, that have science and technology responsibilities. First, there is the Title II Directorate for Information Analysis and Infrastructure Protection, which has primary responsibility for information sharing and cyber security matters. Second, there is the Title III Directorate for Science and Technology, which has primarily responsibility for chemical, biological, radiological, and nuclear threats. However, the responsibilities of the Title III Directorate include supporting the Title II Directorate "by assessing and testing homeland security vulnerabilities and possible threats". McQueary has been nominated to head this Title III position.

The new position of Under Secretary for Science and Technology was created by the Homeland Security Act. See, HR 5005 of the 107th Congress, at Title III, §§ 301-313. Title III pertains to "science and technology in support of homeland security". The Under Secretary's responsibilities include "advising the Secretary regarding research and development efforts and priorities in support of the Department's missions" and "developing, in consultation with other appropriate executive agencies, a national policy and strategic plan for, identifying priorities, goals, objectives and policies for, and coordinating the Federal Government's civilian efforts to identify and develop countermeasures to chemical, biological, radiological, nuclear, and other emerging terrorist threats ..." (See, § 302.)

Title III does not encompass cyber security, computer crimes, information analysis, or information sharing. Title II of the Act, which pertains to "information analysis and infrastructure protection", does cover these subjects. It creates the new position of Under Secretary for Information Analysis and Infrastructure Protection, the responsibilities of which include developing "a comprehensive national plan for securing the key resources and critical infrastructure of the United States, including power production, generation, and distribution systems, information technology and telecommunications systems (including satellites), electronic financial and property record storage and transmission systems, emergency preparedness communications systems, and the physical and technological assets that support such systems." (Parentheses in original.)

The Homeland Security Act also provides (in Title II, at § 231) that "There is hereby established within the Department of Justice an Office of Science and Technology". This office will handle "law enforcement technology".

The Homeland Security Act also provides (in Title III, at § 302) that the Under Secretary for Science and Technology's (i.e., McQueary's) responsibilities include "supporting the Under Secretary for Information Analysis and Infrastructure Protection, by assessing and testing homeland security vulnerabilities and possible threats".

See also, White House summary of Title II and White House summary of Title III.

Tech Crime Report
1/10. Michael Kimble was sentenced in U.S. District Court (EDVa) to 12 months imprisonment for identity theft. The U.S. Attorneys office stated in a release that Kimble "used the names, birth dates and Social Security numbers of six other people to open credit card and bank accounts in their names over the Internet. To maintain control over the accounts, the defendant used a commercial maildrop in Woodbridge as the address for the accounts. Kimble then transferred his own personal debts to the credit cards he had illegally obtained. ... he had transferred nearly $50,000 of his own debts and expenses to credit cards in the names of his victims." The USAO further stated that Kimble, a recruiting captain in the U.S. Army, opened accounts in the names of a subordinate at work, and a prospective recruit. He obtained personal information at work.

1/10. The U.S. Attorneys Office (USAO) filed a criminal complaint in the U.S. District Court (NDCal) charging Qing Chang Jiang with illegally exporting dual use (i.e., both commercial and military) technology to the People's Republic of China in violation of 50 U.S.C. § 1705(b). The complaint was filed under seal on January 8. Jiang was arrested, and the complaint was unsealed, on January 10. The USAO stated in a release that Jiang is charged with exporting microwave amplifiers to The 54th Research Institute in the PRC.

Tech Law Journal is instituting several new practices and procedures with the New Year. All of these changes have one central purpose -- protecting the rights of the author, David Carney.

The Tech Law Journal web site and the Tech Law Journal Daily E-Mail Alert (TLJ Alert) are both authored and published by David Carney. This is a business. The sole source of revenue for this business is subscription payments for the TLJ Alert. Yet, it is currently being widely infringed. This is undermining the financial viability of the business.

See, Letter from the Publisher, which summarizes the new practices and procedures.

See, Subscription Information page for price schedule, methods of payment, and related matters.

See, Memorandum regarding "E-Mail Monitoring".

See, Memorandum regarding "Disclosure of Information to Third Parties".

See, Memorandum to law students explaining why free subscriptions for law students will end after the January 17 issue.

See, Memorandum regarding "Termination of state officials' subscriptions" explaining why free subscriptions for state government officials will end after the January 17 issue.

See, Subscription Form and Contract (for firms, companies, groups, and other entities), or the shorter Subscription Form and Contract (for persons subscribing individually). These contracts are for new paying subscribers, and paying subscribers renewing their subscriptions. Persons receiving free subscriptions (journalists and government officials) should not sign a contract. Paying subscribers whose subscription term has not expired should not sign a contract, until their existing subscription term expires and they resubscribe.

And finally, see revised Privacy Policy.

Monday, January 13
The Senate will meet at 12:00 NOON.

The House is in adjournment until January 27. (See, House Concurrent Resolution 8.)

The Supreme Court will return from the recess that it began on December 16.

11:00 AM - 1:00 PM. The Heritage Foundation will host a panel discussion titled "Harnessing Information Technology to Improve Homeland Security". The speakers include James Gilmore (Chairman, Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction), Lee Holcomb (Office of Homeland Security), Tom Richey (Director of Homeland Security, Microsoft), Tom Gann (VP & GM, Siebel Systems), and Peter Brookes (Heritage). See, notice. Location: Heritage, 214 Massachusetts Ave., NE.

12:00 PM. The Cato Institute will host a panel discussion titled "Free Trade with Chile: Understanding What's at Stake". The speakers will include Regina Vargo, the Assistant U.S. Trade Representative (USTR) for the Americas, and Hernán Büchi, a Former Minister of Finance of Chile. Lunch will follow the program. Location: Cato, 1000 Massachusetts Avenue, NW.

Tuesday, January 14
9:30 AM. The Senate Commerce Committee will hold a hearing titled the "State of the Competition in the Telecom Industry". Media contact: Andy Davis (Hollings) at 202 224-6654. Location: Room 253, Russell Building.

9:30 AM. The Senate Governmental Affairs Committee will hold a hearings on the nomination of Tom Ridge to be Secretary of Homeland Security. Location: Room 342, Dirksen Building.

The U.S. Court of Appeals (DCCir) will hear oral argument in Peninsula Communications v. FCC, No. 01-1273. Petitioner is a radio broadcaster operating on the Kenai Peninsula in south central Alaska. Judges Henderson, Randolph and Garland will preside. Location: 333 Constitution Ave., NW.

Deadline to submit comments to the USPTO to assist it in writing a report to the Congress regarding technological protection systems for digitized copyrighted works and to prevent infringement. This report is required by the Technology, Education and Copyright Harmonization Act of 2002 (TEACH). See, notice in the Federal Register, December 9, 2002, Vol. 67, No. 236, at Pages 72920 - 72921. For more information, contact Michael Shapiro at 703 305-9300 or

Wednesday, January 15
9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. See, agenda. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

Deadline to submit comments to the NIST regarding it plans to disseminate new data regarding condensed phase infrared spectra through the Internet. See, notice in the Federal Register, December 16, 2002, Vol. 67, No. 241, at Page 77053.

Thursday, January 16
12:15 PM. The FCBA's Cable Practice Committee will host a brown bag lunch. The topic will be "Engineering Issues". The speakers will be John Wong and Michael Lance of FCC's Media Bureau. For more information, contact Lisa Cordell at 202 939-7900. RSVP to Wendy Parish at Location: NCTA, 1724 Massachusetts Ave., NW.

12:15 PM. The FCBA's Young Lawyers Committee will host a brown bag lunch. The topic will be planning for the new year. For more information, contact Yaron Dori at or Ryan Wallach at Location: Hogan & Hartson, 555 13th St., NW, Confr. Rm. 9E-407.

The FCBA's Diversity Committee and Young Lawyers Committee will host a series of Law School Outreach Programs for law students interested in practicing communications law at Washington DC area law schools. The event at American University will be held at 4:30 PM. The event at Catholic University will be a 6:00 PM. The event at George Mason University will be at 4:45 PM. The event at Georgetown University Law Center will be at 5:30 PM. The event at Howard University will be at 4:30 PM.

Friday, January 17
EXTENDED AGAIN, TO FEBRUARY 18. Extended deadline to submit reply comments to the Federal Communications Commission (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, FCC release [PDF] and Order [PDF] of October 11, 2002 extending deadlines. See also, Order [PDF] of January 3, 2003.
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