1/26. Richard Thornburgh, the Examiner in the MCI WorldCom bankruptcy proceeding, filed his Third and Final Report [542 pages in PDF] with the U.S Bankruptcy Court (SDNY). This report addresses, among other things, a "state tax minimization program" that "appears improper", and the recommendation that WorldCom has causes of action for negligence and malpractice against KPMG for the "flawed advice" that it provided to WorldCom in connection with this state tax minimization program.

Thornburgh was appointed by the Court on August 6, 2002. See also, Thornburgh's Second Interim Report [PDF], filed on June 9, 2003, and First Interim Report [PDF], filed on November 4, 2002.

The report addresses "WorldCom's state tax minimization program". It states that "This program, which began in 1998, is yet another example of the Company converting what could be legitimate into something that appears improper as a result of its aggressive design and implementation. With respect to the state tax minimization program, WorldCom likely avoided paying hundreds of millions of dollars in state taxes in 1998-2001 based upon the accrual of over $20 billion in questionable royalty charges."

The report continues that "The cornerstone of this program, which was designed by KPMG Peat Marwick LLP (``KPMG´´), was the classification of the ``foresight of top management´´ (``management foresight´´) as an intangible asset, which the parent company could license to the subsidiaries in return for massive royalty charges. As discussed below and in Chapter IV, the Examiner believes that ``management foresight´´ is not an intangible asset that could support the royalty charges and that there are other flaws as well in the WorldCom state tax minimization program. As a result, the accrued royalties, and the substantial state tax savings created thereby, are vulnerable to attack by state taxing authorities."

The report also recommends that, as a result, WorldCom has causes of action against KPMG. It states that "The Examiner believes that WorldCom has causes of action against a number of persons and entities that bear responsibility for WorldCom's injuries."

The potential claims include "Claims for malpractice and negligence against KPMG to recover any interest and/or penalties paid by the Company to any state taxing authorities based upon the flawed advice KPMG provided to WorldCom in connection with the state tax minimization program. The Company may also have claims to require KPMG to return the millions of dollars in fees paid to KPMG for its flawed advice", states the report.

And of course, the report concludes that WorldCom has several claims against Bernie Ebbers and former CFO Scott Sullivan.

The report adds that "The Examiner recognizes that the WorldCom plan of reorganization assigns any such claims to WorldCom", and that "The Examiner expresses no opinion whether any of the claims actually should be pursued."

MCI WorldCom responded to the report in a release. Stasia Kelly, MCI EVP and General Counsel, stated in this release that "The Examiner's discussion of potential claims against KPMG for its involvement in company tax planning in 1997 and 1998 will, of course, receive careful review by the Company and our Board. However, KPMG's involvement in this program has previously been carefully reviewed by our current Audit Committee of the Company's Board of Directors and the Company's inside and outside tax counsel. Based upon this earlier review, the Company concluded that the tax program recommended by KPMG in 1997 and 1998 was appropriate. As a result, the Company has no plans to pursue claims against KPMG."

Thornburgh engaged the law firm of Kirkpatrick & Lockhart as his legal counsel. See also, K&L release.

The report is titled "Third and Final Report by Richard Thornburgh, Bankruptcy Court Examiner". This case is In re WorldCom Inc., et al., U.S. Bankruptcy Court for the Southern District of New York, Case No. 02-13533 (AJG), Judge Arthur Gonzalez presiding.

1/23. The Department of Justice's (DOJ) Antitrust Division filed a Competitive Impact Statement with the U.S. District Court (DC) in USA v. First Data and Concord EFS.

On October 23, 2003, the DOJ, seven states, and the District of Columbia filed a complaint [28 pages in PDF] in District Court against First Data Corporation and Concord EFS, Inc., alleging that First Data's planned acquisition of Concord would violate Section 7 of the Clayton Act.

The complaint alleges that point of sale (POS) personal identification number (PIN) networks are "telecommunications and payment infrastructure that connects merchants to consumers' demand deposit accounts at banks. These networks enable consumers to purchase goods and services from merchants through PIN debit transactions by swiping their bank card at a merchant's terminal and entering a Personal Identification Number, or PIN. Within seconds, the purchase amount is debited from the customer's bank account and transferred to the retailer's bank."

It further alleges that "Concord operates STAR, the nation's largest PIN debit network. STAR currently handles approximately half of all PIN debit transactions in the United States. First Data owns a controlling interest in NYCE, the nation's third-largest PIN debit network."

"First Data's acquisition of Concord would substantially reduce competition among the PIN debit networks for retail transactions, in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18." And ultimately, the complaint alleges, this would lead to higher prices for consumers.

See, story titled "DOJ Sues to Stop Merger of PIN Debit Networks" in TLJ Daily E-Mail Alert No. 765, October 24, 2003.

On December 15, 2003, the parties settled the case. First Data agreed to divest its entire interest in NYCE Corporation in order to proceed with its proposed acquisition of Concord EFS. See, story titled "DOJ Settles With First Data and Concord EFS" in TLJ Daily E-Mail Alert No. 800, December 16, 2003.

The Competitive Impact Statement, which was filed on January 23, 2004, states that "The proposed Final Judgment's requirement that First Data divest its NYCE Holdings will eliminate the anticompetitive effects in the PIN debit network services market that the transaction would have produced. First Data's divestiture of its NYCE Holdings will prevent the combination of STAR and NYCE, the combination of First Data's and Concord's assets that would have violated Section 7 of the Clayton Act. By preventing the combination of STAR and NYCE, the proposed Final Judgment will ensure that merchants retain their current ability to obtain competitive prices and levels of service from the two networks, either by: (1) dropping, or credibly threatening to drop, STAR and/or NYCE; or (2) taking advantage of least-cost routing opportunities between the two networks."

The Tunney Act, which is codified at 15 U.S.C. § 16, requires that the government prepare this Competitive Impact Statement, and allow at least 60 days preceding the effective date of the proposed Final Judgment within which any person may submit written comments regarding the proposed Final Judgment.

This case is United States of American, et al., v. First Data Corporation and Concord EFS, Inc., U.S. District Court for the District of Columbia, D.C. No. 1:03CV02169, Judge Rosemary Collyer presiding.

1/22. The Electronic Privacy Information Center (EPIC) filed a complaint in U.S. District Court (NDCal) against the National Aeronautics and Space Administration (NASA) seeking to compel the production of records pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. § 552. The EPIC seeks records pertaining to the transfer of passenger data from Northwest Airlines (NWA) to the NASA.

The NASA has already produced copies of some records, which the EPIC has published in its website. These records reflect that there was a meeting on December 10-11, 2001. See, presentation outline [20 pages in PDF] titled "NASA Ames Research Center: Northwest Airlines Briefing: December 10-11, 2001", for NASA's explanation of what NASA intended to do with the passenger data.

NWA participated in the meeting. See, NASA e-mail letter [PDF] to Northwest dated December 19, 2001, and NASA fax letter [PDF] to NWA requesting passenger data. NASA wrote that "We would like to request system-wide Northwest Airlines passenger data from July, August and September 2001."

There is also an undated paper [10 pages in PDF] titled "Near Linear Time Detection of Distance-Based Outliers and Applications to Security" jointly authored by employees of NASA and Stanford University. See, story titled "Northwest Airlines Provided Passenger Data to NASA for Data Mining Study" in TLJ Daily E-Mail Alert No. 819, January 20, 2003.

The EPIC has also submitted an administrative complaint [11 pages PDF] to the Department of Transportation (DOT) that asserts that NWA's transfer of passenger data to the NASA violated NWA's privacy policy, and that this, in turn, constitutes an unfair and deceptive trade practice in violation of 49 U.S.C. § 41712. See, story titled "EPIC Complains to DOT About Transfer of Airline Passenger Data to NASA" in TLJ Daily E-Mail Alert No. 820, January 21, 2004.

However, while the NASA has produced some records, it has withheld others. The complaint filed with the District Court seeks an order compelling the NASA "to disclose the requested records in their entirety and make copies available to" the EPIC.

The complaint does not identify just what these withheld records are. It states that the EPIC requested "Any correspondence between representatives of Northwest Airlines and NASA officials or employees regarding the disclosure of Northwest passenger data to NASA", "Any documents detailing, describing, or concerning the disclosure of Northwest passenger data to NASA" and "Any materials related to negotiations or communications between NASA and other commercial airlines for passenger data".

The complaint then alleges that "Defendant NASA withheld from release an unspecified number of responsive records under 5 U.S.C. § 552(b)(5) as ``inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.´´"

The complaint further alleges that the NASA "withheld from release an unspecified number of responsive records under 5 U.S.C. § 552(b)(4) as ``trade secrets and commercial or financial information obtained from a person and privileged or confidential.´´"

Northwest Airlines issued a statement on January 18, 2003: "In the aftermath of the September 11, 2001 tragedy, NASA had discussions with Northwest Airlines’ Security Department regarding a NASA research study to improve aviation security. In December 2001, NASA requested that Northwest’s Security Department provide it with passenger name record data from the period July, August, and September 2001 for NASA’s exclusive use in its research study. Northwest Airlines agreed to provide that data."

This case is Electronic Privacy Information Center v. National Aeronautics and Space Administration, U.S. District Court for the Northern District of California, San Jose Division.

1/27. The Federal Communications Commission (FCC) held event titled "Satellite Rural Forum" which addressed broadband access, information and mass media entertainment, telemedicine, distance learning and other issues. FCC Chairman Michael Powell stated that "I place a high priority on ensuring that Americans living and working in rural and remote parts of our Nation have access to the same kind of high quality, advanced communications services as do Americans living in cities and suburbs." He added that "there is one communications technology -- satellite -- that is capable of reaching each and every single American, in every spot of the country". See, Powell speech [2 pages in PDF].

1/27. The U.S. Court of Appeals (DCCir) issued its opinion [17 pages in PDF] in Vernal Enterprises v. FCC, a petition for review of a Federal Communications Commission (FCC) order denying a request for a refund of a filing fee paid in connection with a permit application for construction of a broadcast station. The Appeals Court denied the petition for review. This case is Vernal Enterprises, Inc., and Larry Schrecongost v. FCC and USA, U.S. Court of Appeals for the District of Columbia, No. 02-1297, a petition for review of a final order of the FCC.

1/27. The European Commission released a document [31 pages in PDF] regarding spam. It is titled "Communication from the Commission to the European Parliament, The Council, The European Economic and Social Committee and the Committee of the Regions on Unsolicited Commercial Commercial Communications or `Spam´" and dated January 22, 2004. See also, EC release dated January 27, 2004.

1/27. The Progress and Freedom Foundation (PFF) released a paper [PDF] titled "Delocalization in Telecommunications Networks". It argues that "modern telecommunications networks are evolving in ways that render local and state authority over many telecommunications policy decisions less justifiable. Networks, and the services offered over the network, are delocalizing in design, operations, traffic and cost characteristics. Further, the benefits from a modernized network are undermined by policies that attempt to make a distinction between local and non-local aspects of the network, particularly as this relates to the services carried on these networks." This paper was written by Douglas Sicker, who is a Adjunct Fellow at the PFF and a professor in computer science and telecommunications at the University of Colorado at Boulder.

The House will meet at 10:00 AM for legislative business. It will consider S 1920 (a bankruptcy related bill) and S 610 (a NASA related bill). See, Republican Whip notice.

9:15 AM. The Department of Homeland Security's (DHS) National Cyber Security Division will hold a telephone press conference discuss the launch of the new National Cyber Alert System. For more information, contact Donald Tighe at 202 282-8010.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in USTA v. FCC. This argument is on petitions for review of the Federal Communications Commission's (FCC) triennial review order [576 pages in PDF] (TRO), released on August 21, 2003. This is A.C. No. 00-1020. Judges Edwards, Randolph and Williams will preside. Location: Coutroom 20, Prettyman Courthouse, 333 Constitution Ave., NW.

9:30 AM - 12:00 NOON. The Potomac Institute for Policy Studies will host an event titled "The Politics and Law of Identity and Identification in Context of the War on Terrorism". For more information, contact Whitney Matson at 703 525-0770. Location: 901 N. Stuart St., Suite 200, Arlington, VA.

10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "Can you say that on TV?': An Examination of the FCC's Enforcement with Respect to Broadcast Indecency". The hearing will be webcast. The witness will be David Solomon Chief of the Federal Communications Commission's (FCC) Enforcement Bureau, Brent Bozell, President of Parents Television Council, Robert Corn-Revere attorney with the law firm of Davis Wright & Tremaine, and William Wertz, EVP of Fairfield Broadcasting Company. See, notice. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123, Rayburn Building.

10:00 AM. The House Judiciary Committee will meet to mark up seven bills, including HR 2824, the "Internet Tobacco Sales Enforcement Act", HR 1768, the "Multidistrict Litigation Restoration Act of 2003 ", and HR 1073, an untitled bill to repeal Section 801 of the Revenue Act of 1916, which is codified at 15 U.S.C. § 72. The event will be webcast. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.

10:00 AM. The Senate Judiciary Committee will hold a hearing on the nomination of Judge Franklin Van Antwerpen to be a Judge of the U.S. Court of Appeals for the 3rd Circuit. See, notice. Press contact: Margarita Tapia (Hatch) at 202 224-5225 or David Carle (Leahy) at 202 224-4242. Location: Room 226, Dirksen Building.

11:00 AM. The House Committee on Homeland Security's Subcommittee on Infrastructure and Border Security will hold a hearing on the US VISIT program. Location: Room 345, Cannon Building.

12:15 PM. The Federal Communications Bar Association's (FCBA) Online Communications Practice Committee will host a brown bag lunch titled "Legislative and Regulatory Update on Internet and E-Commerce Privacy Issues". The speakers will be Chris Hoofnagel (EPIC) and Heidi Salow (Nextel). For more information, contact Vincent Paladini, Karlyn Stanley (CRB, 202 828-9835), or Amy Wolverton. Location: Cole Raywid & Braverman, 1919 Pennsylvania Ave., NW, Suite 200.

6:00 - 8:15 PM. The Federal Communications Bar Association (FCBA) Wireless Practice Committee will host a Continuing Legal Education (CLE) program titled "Implementing the FCC's Secondary Markets Order". The prices to attend range from $50 to $125. Location: Wiley Rein & Fielding, 1750 K Street, NW, 10th Floor.

Deadline to submit requests to participate in the U.S. Patent and Trademark Office (USPTO) public round table meeting on the effectiveness of inter partes reexamination proceedings, tentatively scheduled for February 17, 2004. See, notice in the Federal Register, December 30, 2003, Vol. 68, No. 249, at Pages 75217 - 75218.

CANCELLED. 10:00 AM - 12:00 NOON. The American Enterprise Institute (AEI) will host a program titled "The Dynamics of Two-Sided Markets". The AEI notice states nothing further about the program or its speakers. However, economists use the term "two sided markets" to describe markets for products that must be promoted to two groups to succeed, such as operating systems (developers and users) and payment systems (merchants and consumers). Location: AEI, 12th floor, 1150 17th St., NW.

11:00 AM. The Cato Institute will host a panel discussion titled "Antitrust in the High-Tech Marketplace: The Real Irrational Exuberance?". The speakers will be Lawrence Lindsey (Lindsey Group), Fred Smith (Competitive Enterprise Institute), Jonathan Zuck (Association for Competitive Technology), and Ed Black (Computer and Communications Industry Association). See, notice. The event will be webcast. Lunch will follow the program. Location: Cato, 1000 Massachusetts Avenue, NW.

2:00 - 4:00 PM. The State Department's International Telecommunication Advisory Committee --Radiocommunication Sector (ITAC-R) will hold a meeting to discuss "matters related to the preparations for ITU-R study group meetings taking place in 2004". See, notice in the Federal Register, January 15, 2004 Vol. 69, No. 10, at Page 2380. Location: The Boeing Company, Harry C. Stonecipher Conference Center, 1200 Wilson Boulevard, Arlington, VA.

TIME? Rosemary Coombe (York University) will give a lecture titled "The Globalization of Intellectual Property: Informational Capital and Its Cultures". This is a part of Georgetown University Law Center's (GULC) Colloquium on Intellectual Property & Technology Law Series. For more information, contact Julie Cohen at 202 662-9871. Location: GULC, 600 New Jersey Ave., NW.

6:00 - 8:15 PM. The Federal Communications Bar Association (FCBA) Wireless Practice Committee will host a Continuing Legal Education (CLE) program titled "Political Broadcasting Regulations". Bobby Baker (Assistant Chief of the FCC's Media Bureau's Policy Division), Jack Goodman (General Counsel of the National Association of Broadcasters), and Dawn Sciarrino. The prices to attend range from $50 to $125. Location: 8th Floor Conference Room, Dow Lohnes & Albertson, 1200 New Hampshire Ave., NW.

10:00 AM - 12:00 NOON. The Federal Communications Commission's (FCC) Advisory Committee for the 2007 World Radiocommunication Conference will hold its first meeting. See, FCC notice and agenda [PDF] and notice in the Federal Register, December 22, 2003, Vol. 68, No. 245, at Page 71106. See also, TLJ story titled "Powell Appoints Nancy Victory to WRC-07 Post". Location: FCC, Commission Meeting Room (TW-C305), 445 12th Street, SW.

Extended deadline to submit comments to the Federal Communications Commission (FCC) regarding BellSouth's request for a declaratory ruling that the state commissions may not regulate broadband internet access services by requiring BellSouth to provide wholesale or retail broadband services to voice service customers of competitive local exchange carriers (CLECs) using unbundled network elements (UNEs). BellSouth submitted its 334 page filing on December 9, 2003. See, "Emergency Request for Declaratory Ruling" (without attachments) [35 pages in PDF]. This is WC Docket No. 03-251. See, FCC notice [PDF].

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding the first public draft [238 pages in PDF] of NIST Special Publication (SP) 800-53, titled "Recommended Security Controls for Federal Information Systems". See, NIST release, and story titled "NIST Releases Draft Information Security Guidelines for Federal Agencies", in TLJ Daily E-Mail Alert No. 777, November 12, 2003.

Deadline to submit comments to the Internal Revenue Service (IRS) regarding its notice in the Federal Register stating that it "will provide the ability for IRS e-file program participants to use approved encryption methods for the 2005 and later filing seasons, beginning with the Acceptance Testing System (ATS) in late 2004. For the 2005 filing season, IRS intends to begin discontinuing support of non-encrypted transmissions whether by dedicated or dial-up links on the Public Switched Telephone Network (PSTN)." See, Federal Register, December 29, 2003, Vol. 68, No. 248, at Pages 75022 - 75023.

Presidential primaries will be held in the states of Arizona, Delaware, Missouri, Oklahoma, and South Carolina. New Mexico will hold presidential caucuses.

Day one of a two day Continuing Legal Education (CLE) program titled "Communications Law 101: Everything You Wanted (or Didn't Want) to Know About Communications Technology". The event is sponsored by the Federal Communications Bar Association (FCBA) and the Georgetown University Law Center (GULC). Location: GULC.

The Department of State's (DOS) ITU-T Study Group 13 will meet from February 3 through February 13, 2004. See, notice in the Federal Register, October 31, 2003, Vol. 68, No. 211, at Pages 62158.

Deadline to register to attend the National Institute of Standards and Technology's (NIST) event titled "Spam Technology Workshop". The price to attend is $70. See, notice in the Federal Register, November 25, 2003, Vol. 68, No. 227, at Pages 66075 - 66076.

Deadline to submit comments to the Federal Bureau of Investigation (FBI) regarding its document titled "Final notice of capacity". This pertains to the FBI's implementation of  the Communications Assistance for Law Enforcement Act (CALEA), which is codified at 47 U.S.C. § 1001, et seq. The FBI published this notice in the Federal Register, December 5, 2003, Vol. 68, No. 234, at Pages 68112 - 68121. See also, story titled "FBI Publishes CALEA Final Notice of Capacity" in TLJ Daily E-Mail Alert No.797, December 11, 2003.

Deadline to register for the National Institute of Standards and Technology's (NIST) Computer Security Division's (CSD) and Advanced Network Technologies Division's (ANTD) one day conference titled "Spam Technology Workshop", to be held on February 17. See, notice and conference website.

10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "The Current State of Competition in the Communications Marketplace". The hearing will be webcast. See, notice. Press contact: Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2322, Rayburn Building.

10:30 AM - 12:00 NOON. The Department of State's (DOS) U.S. International Telecommunication Advisory Committee (ITAC) will hold a meeting to discuss matters related to the International Telecommunications Union's (ITU) World Summit on the Information Society (WSIS), which took place on December 10-12, 2003, in Geneva, Switzerland, including the follow-up to the WSIS. See, notice in the Federal Register, January 16, 2004, Vol. 69, No. 11, at Pages 2643 - 2644. Location: auditorium, Historic National Academy of Science Building, 2100 C St. NW.

1:30 PM - 3:30 PM. The Federal Communications Commission's (FCC) World Radioconference 2007 (WRC-07) Advisory Committee, Informal Working Group 2: Satellite Services and HAPS, will meet. See, notice [PDF]. Location: Room 6-B516, 6th Floor, South Conference Room, 445 12th Street, SW.

Day two of a two day Continuing Legal Education (CLE) program titled "Communications Law 101: Everything You Wanted (or Didn't Want) to Know About Communications Technology". The event is sponsored by the Federal Communications Bar Association (FCBA) and the Georgetown University Law Center (GULC). Location: GULC.

4:00 PM. Stacey Dogan (Northeastern University School of Law) will present a paper titled "The Social Norms of Copyright: Sticky or Stuck". For more information, contact Robert Brauneis at 202 994-6138 or rbraun@law.gwu.edu. Location: George Washington University Law School, Faculty Conference Center, Burns Building, 5th Floor, 716 20th Street, NW.