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February 20, 2003, 9:00 AM ET, Alert No. 608.
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USTR Zoellick Discusses IPR With PR China Officials
2/19. U.S. Trade Representative (USTR) Robert Zoellick is on a trip to Japan and PR China to discuss trade related issues. On February 17 he held a press roundtable in Beijing regarding his talks. He discussed intellectual property at length. See, transcript [PDF].

He stated that "the WTO accession of 2001 opens the door to build an economic relationship for years to come. What we are now focused on is the task of WTO implementation, getting down to the basics of business." He added that "We have near term problems to solve so I talked to the Vice Premier and Minister Shi about our ... intellectual property issues ..."

He met with Vice Premier Wen Jiabao (see, Business Week bio) and Ministry of Trade and Economic Cooperation (MOFTEC) Minister Shi Guangsheng (see, ChinaOnline bio).

Robert ZoellickZoellick (at right) stated that "there are a whole host of laws and rules that have to be changed as part of the WTO implementation process. But as a general matter, I think China has tried to follow through on this pretty well. In fact, our focus is more on the enforcement side. I talked with both the Vice Premier and Minister Shi about the enforcement of intellectual property rights. But this is again why China is a particularly interesting place because you build interests within China that recognize the benefits of intellectual property protection because of the software development here and the creative industries development here. As I discussed with Minister Shi, they put a lot of laws in place. They know there has been rampant piracy. He talked to me about some of the criminal penalties that they were putting in place, which is very important if you're going to be effective on this. This is an area where, frankly, our businesses will work with us and the Chinese government and Chinese businesses share the same interest."

Zoellick also said that "In the free trade agreements we negotiated with Chile and Singapore, what became a priority issue for a lot of the business software industry and the entertainment industry was establishing new intellectual property rights for a digital world, and in particular the question of, as you downloaded software or music or movies into your memory was there a property right even though you never had a hard copy, you never had a physical form? Because if you didn't people could obviously send it out on networks. So we were establishing property rights of a different type for the changing area."

He continued that "I think part of what I hope to do with the Chinese authorities is, first, establish this as a mutual interest. And I think we are well on our way to doing that given the creative industries here. Second, is to encourage, and I think this part has already been well on its way, make sure you have the right legal structure. Then third, step up the enforcement action. One point that I think is important and is not applied in some countries, but I was pleased again to discuss this with Minister Shi, is the need for criminal penalties. Because, sometimes if it's just financial penalties, it becomes a cost of doing business. So, like you, wherever I go in the world you see major problems of pirating so this is not a problem that is done overnight. But then the next step is, I want to try to build a culture of cooperation in intellectual property so as we turn to the next set of issues, particularly those related to the digital world, that we can try to establish the right standards."

Zoellick also traveled to Tokyo, Japan to attend the World Trade Organization (WTO) Informal Ministerial Meeting. Afterwards, he held a press roundtable. See, February 16 transcript [PDF]. He criticized the Japanese government for resisting tariff cuts in agriculture. He stated that, "they're sacrificing Japan's strengths on the altar of rice."

Zoellick is scheduled to testify before the House Ways and Means Committee on Wednesday, February 26.

SEC Files Fraud Complaint Against Spammer
2/19. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (EDNY) against Samuel Aaron Meltzer alleging securities fraud in connection sending false and misleading spam touting stocks.

The complaint states that "Defendant Meltzer is a professional Internet ``spammer´´ who used the Internet to commit securities fraud. In return for compensation from stock promoters and issuers, Meltzer sent millions of unsolicited emails and created numerous websites to promote various penny stocks. In order to conceal his identity -- and to avoid the detection of web hosts seeking to stop Internet spam -- Meltzer operated under at least thirty different assumed Internet identities."

The complaint further alleges that his "spam and websites made false and misleading representations about the stock he helped to promote. First, Meltzer falsely stated that his recommendations represented his own investment opinions based on his review of the issuer's public filings and his interviews with the issuer's management. In fact, Meltzer did not review the issuers' filings, did not interview their management, and simply republished recommendations and representations that he received from the promoters who had hired him." And, "Second, in his emails and websites, Meltzer knowingly or recklessly made false and misleading representations concerning the issuers' current business and projections of future performance that had no reasonable basis in fact."

The complaint also states that "Meltzer touted the stocks of at least twelve issuers and received at least $159,619.62 in stock and cash as ill-gotten gains as a result of his fraudulent conduct."

The two count complaint alleges fraud in violation of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks an injunction against further violations of federal securities law, an accounting, disgorgement of illegal gains, civil penalties, and an order prohibiting Meltzer from participating in an offering of penny stock.

The complaint alleges facts constituting undisclosed touting. However, there is no count alleging illegal touting. Section 17(b) of the Securities Act, codified at 15 U.S.C. § 77q(b), provides that "It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof."

See also, SEC release.

Representatives Discuss Cyber Security and IPR with EU Officials
2/19. Rep. Bob Goodlatte (R-VA) and Rep. Rick Boucher (D-VA) travelled to Brussels, Belgium this week for discussions with members of the European Parliament and European Commission regarding cyber security and intellectual property. Reps. Goodlatte and Boucher are co-chairs of the Congressional Internet Caucus.

Rep. Bob GoodlatteRep. Goodlatte (at right) issued a release that stated that he and Rep. Boucher "commended the EU Commission on its recent plan to establish a European Network and Information Security Agency to coordinate network security policy in an effort to avert cyber-attacks, but cautioned the Commission against the agency setting network security standards, as opposed to voluntary, industry-led standardization." See, the EU proposal [MS Word].

Rep. Goodlatte's release also stated that the two Congressmen "spoke in support of a recent EU Directive on the Enforcement of Intellectual Property Rights, which would harmonize civil and criminal penalties for intellectual property infringement throughout the EU. However, Goodlatte and Boucher strongly urged the expansion of the Directive to include criminal penalties for non-commercial mass distribution of copyrighted works, similar to the NET Act in U.S. law, which was authored by Congressman Goodlatte." See, January 30, 2003, proposal for a directive [PDF].

Reps. Goodlatte, Boucher, and others regularly travel to Europe to discuss technology related issues. Their last trip was in February of 2002. See, story titled "Rep. Goodlatte Addresses Trip to Russia and EU" in TLJ Daily E-Mail Alert No. 381, March 5, 2002, and transcript of Rep. Goodlatte's media roundtable of February 28, 2002.

People and Appointments
2/19. Narda Jones was named Legal Counsel to the Federal Communications Commission's (FCC) Wireline Competition Bureau Chief. She will provide advice on universal service and other issues. She has been with the FCC since January of 2001. Before that, she an Assistant Minnesota Attorney General and advised the Minnesota Public Utilities Commission on telecommunications and energy issues. See, FCC release [MS Word].
More News
2/19. The Rural Utilities Service (RUS) published a notice in the Federal Register stating that it has amended its regulations on Telecommunications Standards and Specifications for Materials, Equipment and Construction, by rescinding the current issue of RUS Bulletin 345-22, RUS Specification for Voice Frequency Loading Coils, PE-26. The RUS stated that "This specification has become outdated because of advancements made in the delivery of telecommunications services to rural subscribers." This change takes effect on March 21, 2003. See, Federal Register, February 19, 2003, Vol. 68, No. 33, at Pages 7897-7898.

2/19. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (EDCal) against Paul Moller and Moller International, Inc. alleging a fraudulent, unregistered offering and the filing of a fraudulent Form 10-SB. The SEC's complaint states that Moller used "E-mail, and an internet website to solicit investor interest and sell" stock. Its states that he made fraudulent claims regarding "Skycar" technology. This, claimed Moller, is a flying car, that can hover, or fly 400 MPH 15 feet above highways, that would sell for the price of a luxury car. He raised $5 Million from investors. See also, SEC release.

Thursday, February 20
The House, Senate and Supreme Court are in recess.

NEW TIME. 11:00 AM. The Federal Communications Commission (FCC) will hold a meeting. The agenda includes a report and order regarding the Section 251 unbundling obligations of incumbent local exchange carriers (ILECs). Press contact: David Fiske at 202 418-0500. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

9:00 AM - 5:00 PM. Federal Trade Commission (FTC) workshop on cross border fraud, including Internet and e-mail based fraud. See, notice. Location: Room 432 (and Room 332 for overflow), FTC, 600 Pennsylvania Avenue, NW.

10:00 AM - 12:00 PM. The Department of State's International Telecommunication Advisory Committee (ITAC) will meet. A notice in the Federal Register states that the purpose of this meeting is "to begin preparations for the meeting of the ITU Telecommunications Development Advisory Group, which will take place March 19-21, 2003 in Geneva, Switzerland", and/or "to prepare for the 2003 meeting of the Telecommunications Development Advisory Group (TDAG)". The notice also states requirements for admission. See, Federal Register, February 6, 2003, Vol. 68, at Page 6250. Location: State Department.

9:00 - 11:30 AM. The Federal Communications Commission's (FCC) Public Safety National Coordination Committee, Interoperability Subcommittee will meet at the FCC. Location: FCC, 445 12th Street, SW.

12:30 - 3:00 PM. The Federal Communications Commission's (FCC) Public Safety National Coordination Committee, Technology Subcommittee will meet. Location: FCC, 445 12th Street, SW.

1:00 PM. Mark Cooper (Consumer Federation of America), Jeff Kramer (AARP), and a representative of the National Association of State Utility Consumer Advocates will hold media briefing by teleconference on the Federal Communications Commission's UNE rules. To participate, call 888 243-0812, and provide passcode 6428858. A replay will be available through Monday, February 24 at 888 266-2081. For more information, contact Mark Cooper at 301 384-2204.

2:00 PM. Federal Communications Commission (FCC) Commissioner Kathleen Abernathy will hold a press briefing. For more information, contact Mathew Brill at 202 418-2400. Location: FCC, Room 8B-115, 445 12th Street SW.

3:00 - 5:30 PM. The Federal Communications Commission's (FCC) Public Safety National Coordination Committee, Implementation Subcommittee will meet. Location: FCC, 445 12th Street, SW.

5:00 PM. Extended deadline to submit reply comments to the Copyright Office (CO) in response to its Notice of Inquiry (NOI) regarding the exemption of certain classes of works from the prohibition against circumvention of technological measures that control access to copyrighted works, pursuant to 17 U.S.C. § 1201. See, CO summary of this proceeding, notice in the Federal Register: October 15, 2002, Vol. 67, No.199, at Pages 63578 - 63582, and comments already filed.

Friday, February 21
9:00 AM. The Alliance for Public Technology (APT) will host a policy forum and awards luncheon. The scheduled speakers include Rep. Sylvester Reyes (D-TX), Bruce Mehlman (Assistant Secretary of Commerce for Technology Policy), Kyle Dixon (Special Counsel to FCC Chairman Powell for Broadband Policy), and William Kennard (former FCC Commissioner), and Brett Perlman (Commissioner of the Texas Public Utilities Commission). The program, which is titled "2003 Broadband Forum: Delivering the Promise: Strategies for Universal Broadband Deployment", begins at 9:15 AM. The luncheon is at 12:00 NOON. The policy forum is free; the luncheon is a fundraiser. See, APT notice. Location: National Press Club, 529 14th St. NW, 13th Floor.

9:30 AM - 12:30 PM. The Federal Communications Commission's (FCC) Public Safety National Coordination Committee will meet. See, notice in the Federal Register, January 23, 2003, Vol. 68, No. 15, at Page 3252. Location: FCC, 445 12th Street, SW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding BellSouth's December 20, 2002 Petition for Forbearance [16 pages in PDF] from application of the separate subsidiary requirements to provide international directory assistance service. BellSouth asked the FCC to forbear from applying the structural separation requirements of 47 U.S.C. § 272 to allow BellSouth to provide international directory assistance service on an integrated basis together with its local and nonlocal directory assistance services. See, FCC notice [2 pages in PDF]. This is CC Docket No. 97-172.

Extended 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. Due to snowfall in Washington DC, the extended deadline of February 18 was further extended to February 21. See, February 19 order [MS Word].

Monday, February 24
The Senate will return from its one week recess at 12:00 NOON. The Supreme Court will return from the recess which it began on January 27.

3:00 PM. The Federal Communications Commission's (FCC) Federal State Joint Conference on Accounting Issues will hold a public meeting. See, FCC notice [MS Word]. Location: FCC, Commission Meeting Room (Room TW-C305), at 445 12th Street, SW.

Deadline to submit comments to the The National Telecommunications and Information Administration (NTIA) regarding the state uniform commercial code exception to the Electronic Signatures in Global and National Commerce (E-SIGN) Act. The Act provides, at §101, for the acceptance of electronic signatures in interstate commerce, with certain enumerated exceptions. §103 of the Act provides that the provisions of section 101 shall not apply to "the Uniform Commercial Code, as in effect in any State, other than sections 1-107 and 1-206 and Articles 2 and 2A". The Act also requires the NTIA to review, evaluate and report to Congress on each of the exceptions. The E-SIGN Act is codified at 15 U.S.C. § 7001, et seq. The exceptions are codified at 15 U.S.C. § 7003. See, notice in the Federal Register, December 24, 2002, Vol. 67, No. 247, at Pages 78421 - 78423.

Tuesday, February 25
The House will return from its one week recess at 2:00 PM.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Rice v. FCC, No. 01-1474. Judges Ginsburg, Sentelle and Randolph will preside. Location: 333 Constitution Ave., NW.

12:15 PM. The FCBA's Cable Practice Committee will host brown bag lunch. The speakers will be House Commerce Committee counsel. RSVP to Wendy Parish at Location: NCTA, 1724 Massachusetts Ave., NW, 2nd Floor Conference Room.

3:00 PM. The House Homeland Security Committee will hold its organizational meeting. Press contact: Kate Whitman at 202 225-5611. Location: Room 2359, Rayburn Building.

Wednesday, February 26
10:00 AM. The House Commerce Committee's Telecom and Internet Subcommittee will hold a hearing titled "Health of the Telecommunications Sector: A Perspective from the Commissioners of the FCC". See, notice. Location: Room 2123, Rayburn Building.

10:30 AM. U.S. Trade Representative (USTR) Robert Zoellick will testify before the House Ways and Means Committee about the administration's trade agenda. Location: Room 1100, Longworth Building.

12:15 PM. The FCBA's Online Communications Practice Committee will host a brown bag lunch. The topic will be "Patent Licensing: Surprising Revelations About the True Currency of a Technology Based Economy". The speaker will be David Martin, CEO of M.CAM. RSVP to Beatriz Zaloom at Location: Kelley Drye & Warren, 1200 19th St., NW, Suite 500.

Day one of a three day conference titled "Third Annual Privacy Summit" hosted by the International Association of Privacy Officers.

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