Tech Law Journal Daily E-Mail Alert
July 16, 2003, 9:00 AM ET, Alert No. 699.
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Greenspan Testifies Before House Committee

7/15. Federal Reserve Board Chairman Alan Greenspan appeared before the House Financial Services Committee. He testified and delivered the semiannual Monetary Policy Report to the Congress. The Report addresses, among other topics, the state of the tech sector. See also, prepared testimony.

The Report states that "Investment in equipment and software (E&S) continues to languish. Firms reportedly remain reluctant to undertake new projects because of the uncertainty about the economic outlook and heightened risk aversion in the wake of last yearís corporate governance and accounting problems. ... In addition, technological advances continue to depress the relative price of computers at a time when stretched-out replacement cycles have apparently widened the gap between the latest technology and that embodied in many of the machines currently in use."

The report adds that "Real outlays on high-tech equipment and software rose at an annual rate of about 11 percent in the first quarter, a bit faster than they had in 2002. Real purchases of computers and peripheral equipment remained on the moderate uptrend that has been evident since such spending bottomed out in 2001, and outlays on communications equipment picked up after an extended period of weakness."

It also states that "Real E&S spending appears to have turned up in the second quarter, in part because of a step-up in the pace of real computer investment. However, incoming data suggest that outlays on communications equipment did not repeat their first-quarter spurt."

The Report also addresses employment. It states that "Employment in the information sector, which includes telecommunications, publishing, and Internet-related services, continued to decrease, though a shade less rapidly than over the preceding two years."

Senate Finance Committee Holds Hearing on Tax Policy and International Competitiveness

7/15. The Senate Finance Committee held a hearing titled "An Examination of U.S. Tax Policy and Its Effect on the International Competitiveness of U.S.-Owned Foreign Operations."

Sen. Charles Grassley (R-IA), the Chairman of the Committee, stated in his opening statement [PDF] that "International tax reform is long overdue. Our current system is based on a framework enacted during President Kennedyís administration. In an era of expanding global markets, falling trade barriers, and technological innovations that melt away traditional notions of national borders, it is critical that our international tax laws keep pace with new business realities."

Similarly, Sen. Max Baucus (D-MT), the ranking Democrat on the Committee, stated in his opening statement [PDF] that "Our international tax laws have not kept up with the increased globalization of the economy."

Pamela Olson, Deputy Assistant Secretary at the Department of the Treasury, stated in her prepared testimony that "our tax code has not kept pace with the changes in our economy. From the vantage point of the increasingly global marketplace in which U.S. companies compete, our tax rules appear outmoded, at best, and punitive of U.S. economic interests, at worst. Most other developed countries of the world are concerned with setting a competitiveness policy that permits their workers to benefit from globalization."

Pamela OlsonOlson (at right) also addressed the research and development tax credit. She stated that "The President's budget also proposes to make permanent the research and experimentation tax credit. Research is central to American businessesí ability to compete successfully in the global economy. It results in new processes and innovative products that open up new markets and create job opportunities. American businesses can continue to compete only if they stay at the forefront of technological innovation. The research credit encourages technological developments that are an essential component of economic growth and a high standard of living in the future. A permanent research credit would remove the uncertainty about its availability in the future and thereby enable businesses to factor the credit into their decisions to invest in research projects."

Dan Kostenbauder, VP for Transaction Taxes at Hewlett Packard, wrote in his prepared testimony [12 pages in PDF] that "Congress should enact forward looking reforms to the international tax provisions of the Internal Revenue Code that will enhance the ability of American companies to compete in global markets and emphasize the strengths of the U.S. economy."

He recommended that Congress repeal the foreign base company rules. He elaborated that "The foreign base company sales income and foreign base company services income rules of Subpart F place major constraints on the ability of U.S.-based companies to operate in overseas markets -- a restriction that is not shared by our foreign competitors."

He also recommended that Congress increase the foreign tax credit carry forward period from 5 to 10 years, and remove the 90% limitation on claiming foreign tax credits from the Alternative Minimum Tax.

See also, prepared testimony in PDF of Davis Rosenbloom (Caplin & Drysdale), James Hines (University of Michigan Business School), Charles Hahn (Dow Chemical), Mike Gaffney (Merrill Lynch), and Stephen Shay (Ropes & Gray).

House Debates Foreign Relations Authorization Act

7/15. The House began consideration of HR 1950, the "Foreign Relations Authorization Act, Fiscal Years 2004 and 2005". The final vote may take place on Wednesday, July 16.

During debate on Tuesday, July 15, the House rejected an amendment [3 pages PDF scan] offered by Rep. Ellen Tauscher (D-CA) that would have allowed exporters of commercial communications satellites to share marketing information with prospective customers in NATO countries, and in Japan, Australia, and New Zealand. The amendment would not have allowed the transfer of any sensitive encryption and/or source code data, detailed design data, engineering analysis, or manufacturing know-how.

The amendment was narrowly defeated by a vote of 207-219. See, Roll Call No. 366. Voting correlated with party affiliation. Democrats tended to vote for the amendment, while Republicans tended to vote against it.

The bill also includes other technology and communications related provisions. It includes a version of the "Global Internet Freedom Act", which had previously been introduced as a stand alone bill by Rep. Chris Cox (R-CA) and Rep. Tom Lantos (D-CA). It would authorize funding for a new Office of Global Internet Freedom, which would "develop and implement a comprehensive global strategy to combat state-sponsored and state-directed Internet jamming and persecution of those who use the Internet."

This bill also authorizes an appropriation of $10 Million for combatting piracy of United States copyrighted materials in countries that are not members of the Organization for Economic Cooperation and Development (OECD).

It also authorizes an appropriation of $1.3 Billion over two years for the Broadcasting Board of Governors. This would enable it to increase broadcasting by Voice of America in the Middle East.

People and Appointments

7/15. Jerry Duvall was named Director of Media Economic Research in the Federal Communications Commission's (FCC) Media Bureau. He will lead a "new economic research initiative that will emphasize independent market analysis and forward thinking research on how media markets operate today and how they will operate in the future". Tracy Waldon was picked to replace Duvall as the Media Bureau's Chief Economist. See, FCC release [PDF].

7/15. The Senate confirmed Lonny Suko to be a Judge of the U.S. District Court (WDWash) by a vote of 94-0. See, Roll Call No. 276.

7/14. The Senate confirmed Samuel Der-Yeghiayan to be a Judge of the U.S. District Court (NDIll) by a vote of 89-0. See, Roll Call No. 275.

7/14. The Senate confirmed Robert Brack to be a Judge of the U.S. District Court (NM).

More News

7/15. The Department of Homeland Security (DHS) announced that on June 27, 2003 it entered into a five year, $90 Million agreement with Microsoft, under which Microsoft will be the primary technology provider to the DHS to supply software for about 140,000 desktops, as well as server software. The agreement provides the DHS with a standard desktop configuration that includes Windows XP Operating System, Microsoft Office Professional, and the Core Client Access licenses. This comes to about $642.86 per desktop.

7/15. President Bush submitted a message to the Congress supporting legislation to implement the U.S. Singapore Free Trade Agreement. He wrote that "This Agreement provides state-of-the-art intellectual property protection, including significant commitments on trade in digital products. It ensures that electronic commerce will stay free of duties and discriminatory rules. In addition, Singapore will accede to international treaties dealing with copyright and access issues for the Internet." He also wrote a similar message to the Congress regarding the U.S. Chile Free Trade Agreement.

7/15. The Federal Communications Commission (FCC) released its Eighth Report [147 pages in PDF] in its proceeding titled "Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services". The FCC announced this report at its June 26 meeting. This is WT Docket No. 02-379.

7/15. The Federal Communications Commission (FCC) released its annual report [71 pages in PDF] titled "Reference Book of Rates, Price Indices, and Household Expenditures for Telephone Service". See also, FCC release [2 pages in PDF] summarizing the report.

7/14. The U.S. Patent and Trademark Office (USPTO) published a notice in the Federal Register that describes and lists rule changes pertaining USPTO fees. See, Federal Register, July 14, 2003, Vol. 68, No. 134, at Pages 41532 - 41535. These changes take effect on October 1, 2003. However, legislation is pending in the Congress that would supercede this rule. On July 9, the House Judiciary Committee approved HR 1561, the "United States Patent and Trademark Fee Modernization Act of 2003". See, story titled "House Judiciary Committee Approves USPTO Fee Bill" in TLJ Daily E-Mail Alert No. 695, July 10, 2003.

7/14. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (DC) against Carnegie International Corporation and several of its officers alleging violation of federal securities laws in connection with improperly reporting revenue and income on three transactions in filings with the SEC. Carnegie is a former publicly traded holding company that owned and operated a credit card services company, a telephone entertainment company, and a voice recognition technology company. The individual defendants are David Gable (Chairman), Lowell Farkas (P/CEO), David Pearl (Secretary), Richard J. Greene (former CFO), Scott Caruthers (former director), and Dashielle Lashra Caruthers. The complaint alleges violation of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and violation of the reporting, books and records, and internal controls provisions of Exchange Act Sections 12(g), 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Exchange Act Rules 12b-20 and 13a-1. The SEC also stated in a release that "Without admitting or denying the allegations in the Commission's complaint, all of the defendants except Gable have agreed to settle the Commission's charges by consenting to the entry of final judgments that, if approved by the Court, would permanently enjoin them from further violations of the securities laws. In addition, Farkas and Pearl have consented to be permanently barred from serving as officers or directors of any public company."

7/15. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein issued a release [PDF] in which he, again, criticized the FCC's Report and Order and Notice of Proposed Rulemaking [257 pages in PDF] regarding its media ownership rules. The FCC announced the Report and Order on June 2, and released it on July 2. In this release, Adelstein stated that "In an apparent blunder, the FCC's new rules count Minot, North Dakota, as if it had more TV stations than Detroit, Michigan. Many small markets are now considered among the largest in the country. Iím asking my colleagues to reconsider the rule changes so we can fix this anomaly before new mergers take place that let a single owner dominate the media in many smaller towns." See also, stories titled "FCC Announces Revisions to Media Ownership Rules" and "Reaction to the FCC's Media Ownership Announcement" in TLJ Daily E-Mail Alert No. 672, June 3, 2003, and story titled "FCC Releases Media Ownership Order and NPRM" in TLJ Daily E-Mail Alert No. 692, July 7, 2003.

Wednesday, July 16

The House will meet at 10:00 AM for legislative business. See, Republican Whip Notice.

The Federal Communications Commission's (FCC)  Public Safety National Coordination Committee's (PSNCC) subcommittees will hold meetings. The Interoperability Subcommittee will meet from 9:00 - 11:30 AM. The Technology Subcommittee will meet from 12:30 - 3:00 PM. The Implementation Subcommittee will meet from 3:00 - 5:30 PM. Location: FCC, 445 12th Street, SW, Room TW-C305 (Commission Meeting Room).

9:30 AM. The Senate Commerce Committee will hold a hearing on proposed legislation to make permanent the moratorium on taxes on Internet access. The witnesses will be Paul Misener (Amazon.com), Joseph Ripp (AOL), Mark Beshears (Sprint), and Billy Hamilton (Texas Comptroller of Public Accounts). See, notice. Location: Press contact: Rebecca Hanks (McCain) 202 224-2670 or Andy Davis (Hollings) at 202 224-6654. Room 253, Russell Building.

10:00 AM. The House Judiciary Committee will hold a meeting to mark up several bills, including HR 49, the "Internet Tax Nondiscrimination Act". The meeting will be webcast. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.

10:00 AM - 12:00 NOON. The House Science Committee will hold a hearing titled "Supercomputing: Is the U.S. on the Right Path?" The witnesses will be Raymond Orbach (Department of Energy), Peter Freeman (National Science Foundation), Daniel Reed (University of Illinois at Urbana Champaign), and Vincent Scarafino (Ford Motor Company). Press contact: Heidi Tringe at 202 225-4275. Location: Room 2318, Rayburn Building.

10:00 AM. Federal Reserve Board Chairman Alan Greenspan will testify before the Senate Banking Committee. Location: Room 538, Dirksen Building.

10:30 AM. The House International Relations Committee will hold a hearing titled "Intellectual Property Crimes: Are Proceeds From Counterfeited Goods Funding Terrorism?" Location: Room 2172, Rayburn Building.

12:00 NOON - 2:00 PM. The Federal Communications Bar Association's (FCBA) International Practice Committee and the Computer & Telecommunications Law Section of the D.C. Bar Association will host a brown bag lunch (with admission charges) titled "Is There a Worldwide Consensus on Implementing New Wireless Services? - A Debriefing of the 2003 World Radiocommunications Conference". The scheduled speakers include John Giusti (FCC's International Bureau), Jennifer Manner (Legal Advisor to FCC Commissioner Abernathy), Cecily Holiday (State Department), Karl Nebbia (NTIA's Office of Spectrum Management), James Voorhies (NTIA International Spectrum Plans Program Manager), Audrey Allison (Boeing), Jennifer Warren (Lockheed Martin). The moderators will be Lisa Choi (FCC's International Bureau), and Troy Tanner (Swidler Berlin). Location: Wilmer Cutler & Pickering, 2400 N St., NW, Concourse Level. For more information contact laurabsherman @hotmail.com.

5:15 PM. The U.S. and E.U. Internet Caucuses will hold a press conference to address meetings this week between members of the European Parliament, the Congress, and government officials regarding cross Atlantic internet policy. Location: Room 1302, Longworth Building.

The Congressional Internet Caucus Advisory Committee will host a reception, immediately following completion of the above listed press conference. RSVP to Megan Kinnaird at 202 638-4370 or megan@netcaucus.org. Location: Room 1300, Longworth Building.

Thursday, July 17

The House will meet at 10:00 AM for legislative business. It will consider several non tech related items. See, Republican Whip Notice.

9:30 AM. The Senate Commerce Committee will meet to consider pending calendar business. Press contact: Rebecca Hanks (McCain) 202 224-2670 or Andy Davis (Hollings) at 202 224-6654. See, notice. Location: Room 253, Russell Building.

9:30 AM. The Senate Judiciary Committee will hold an executive business meeting. The agenda includes consideration of several judicial nominees: William Pryor (U.S. Court of Appeals for the 11th Circuit), James Browning (District of New Mexico), Kathleen Cardone (Western District of Texas), James Cohn (Southern District of Florida), Frank Montalvo (Western District of Texas), and Xavier Rodriguez (Western District of Texas). The agenda also includes consideration of several executive branch nominations: Jack Goldsmith (Assistant Attorney General in charge of the Office of Legal Counsel), Christopher Wray (Assistant Attorney General in charge of the Criminal Division), and Michael  Garcia (Assistant Secretary, Department of Homeland Security). The agenda also includes consideration of several bills and resolutions, including legislation implementing the U.S. Singapore Free Trade Agreement and the U.S. Chile Free Trade Agreement; the Committee has jurisdiction over the visa provisions. See, notice. Press contact: Margarita Tapia at 202 224-5225. Location: Room 226, Dirksen Building.

9:30 AM - 2:30 PM. The Federal Communications Commission's (FCC)  Public Safety National Coordination Committee (PSNCC) will hold a general membership meeting. See, notice in the Federal Register, June 20, 2003, Vol. 68, No. 119, at Pages 6989 - 36990. Location: FCC, 445 12th Street, SW, Room TW-C305 (Commission Meeting Room).

10:00 AM. The Senate Finance Committee will meet in executive session to consider the United States-Chile Free Trade Agreement Implementation Act, and the United States-Singapore Free Trade Agreement Implementation Act. This session will take place during the Committee's hearing on nursing home quality, as soon as a quorum is present. Location: Room 215, Dirksen Building.

1:00 PM. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property will hold a hearing on HR 2517, the "Piracy Deterrence and Education Act of 2003." The hearing will be webcast. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.

Friday, July 18

RESCHEDULED? 9:30 AM. The Senate Judiciary Committee will hold a hearing on several pending judicial nominations: Steven Colloton (U.S. Court of Appeals for the Eighth Circuit), Henry Floyd (District of South Carolina), Brent McKnight (Western District of North Carolina), David Proctor (Northern District of Alabama). The hearing will also include the nomination of Rene Acosta to be an Assistant Attorney General in charge of the Civil Rights Division. Press contact: Margarita Tapia at 202 224-5225. Location: Room 226, Dirksen Building.

Deadline to submit comments to the Federal Trade Commission (FTC) regarding its proposed consent agreement with Guess?, Inc. and Guess.com, Inc. (Guess) pertaining to the FTC's allegations of false or misleading representations Guess made to consumers about the security of personal information collected online through www.guess.com, Guess' online store. See, notice in the Federal Register, June 24, 2003, Vol. 68, No. 121, at Pages 37496 - 37498.

Monday, July 21

3:00 PM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "The Regulatory Status of Broadband Services: Information Services, Common Carriage, or Something in Between?" The hearing will be webcast. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123, Rayburn Building.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry (NOI) pertaining to the possibility of incorporating receiver performance specifications into the FCC's spectrum policy. This NOI follows the recommendations of the FCC's Spectrum Policy Task Force (SPTF) report [PDF] of November 15, 2002. See, story titled "FCC Announces NOI Re Receiver Performance Standards" in TLJ Daily E-Mail Alert No. 624, March 17, 2003. See also, notice in the Federal Register, May 5, 2003, Vol. 68, No. 86, at Pages 23677 - 23686. This is ET Docket No. 03-65, FCC 03-54. For more information, contact Hugh Van Tuyl at the FCC's Office of Engineering and Technology (OET) at 202 418-7506 or hvantuyl@fcc.gov.

Deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) in response to its notice in the Federal Register requesting public comments regarding changes needed to implement a Patent Cooperation Treaty (PCT) style Unity of Invention standard in the U.S. See, Federal Register, May 20, 2003, Vol. 68, No. 97, at Pages 27536 - 27539. For more information, contact Robert Clarke at 703 305-9177 or robert.clarke@uspto.gov.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking, released on April 30, 2003, regarding changes to its rules implementing the FCCs policy to carry forward unused funds from the schools and libraries universal support mechanism (aka e-rate subsidies) in subsequent funding years. See, notice in the Federal Register, June 20, 2003, Vol. 68, No. 119, at Pages 36961 - 36967.

Tuesday, July 22

10:00 - 11:30 AM. The Intellectual Property Law Section of the D.C. Bar Association will host a visit to the Copyright Office. Prices vary. For more information, call 202 626-3463. Location: Copyright Office, Room 401, Madison Building, First Street and Independence Avenue, SE.

? 10:00 AM. The Senate Judiciary Committee will hold a hearing on several pending judicial nominations: Steven Colloton (U.S. Court of Appeals for the Eighth Circuit), Henry Floyd (District of South Carolina), Brent McKnight (Western District of North Carolina), David Proctor (Northern District of Alabama). The hearing will also include the nomination of Rene Acosta to be an Assistant Attorney General in charge of the Civil Rights Division. Press contact: Margarita Tapia at 202 224-5225. Location: Room 226, Dirksen Building.

DATE & TIME CHANGE. 2:00 AM. The Senate Judiciary Committee will hold a hearing "Bankruptcy and Competition Issues in relation to the WorldCom Case". Press contact: Margarita Tapia at 202 224-5225. Location: Room 226, Dirksen Building.

3:00 PM. The National Telecommunications and Information Administration (NTIA) will hold a public briefing on its creation of a second level domain within the .us country code domain that is restricted to material that is not harmful to minors. This is required by the Dot Kids Implementation and Efficiency Act of 2002, HR 3833 in the 107th Congress, Public Law No. 107-317. This briefing will provide information about the domain, instructions about registering a kids.us address, content guidelines and restrictions, and an overview of the content review process. See, NTIA notice. Location: Room 2123, Rayburn Building.

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