|Senators Introduce Bill to Amend Copyright
Act to Ban Inducement of Infringement
6/22. Sen. Orrin Hatch (R-UT) and
others introduced S 2560, the "Inducing Infringement of Copyrights Act of
2004". The bill is very short and simple, but, if enacted, would bring about a major
change in copyright law. It would create a new cause of action for "intentional
inducement of infringement". It would not affect the existing court made
law of contributory and vicarious infringement.
The bill does not enumerate any specific technologies. It is technology
neutral. However, the wording of
the bill suggests, and Sen. Hatch and Sen. Frist stated in the Senate, that the
present intended target of the
bill is the distributors of the peer to peer systems that are used to infringe
Nevertheless, the statute does not limit its application to any one
technology, and several commentors suggested that it
would have application to a range of other activities.
Currently, 17 U.S.C. §
501 addresses infringement of copyright. S 2560 would add a new subsection (g)
to this section. This new subsection, provides, in full, as follows:
"(1) In this subsection, the term `intentionally induces´ means intentionally
aids, abets, induces, or procures, and intent may be shown by acts from which a
reasonable person would find intent to induce infringement based upon all relevant
information about such acts then reasonably available to the actor, including whether
the activity relies on infringement for its commercial viability.
(2) Whoever intentionally induces any violation identified in subsection (a)
shall be liable as an infringer.
(3) Nothing in this subsection shall enlarge or diminish the doctrines of
vicarious and contributory liability for copyright infringement or require any
court to unjustly withhold or impose any secondary liability for copyright
Subsection (a) now provides, in part, that "Anyone who violates any of the
exclusive rights of the copyright owner as provided by sections 106 through 121
... or who imports copies or phonorecords into the United States in violation of
section 602, is an infringer of the copyright ..."
The bill's list of cosponsors is bipartisan, and includes key leaders of the
Senate. The lead sponsor is Sen. Hatch, the Chairman of the
Committee (SJC), which has jurisdiction over this bill.
Sen. Patrick Leahy (D-VT), the ranking
Democrat on the SJC, is a cosponsor.
Sen. Lindsey Graham (R-SC),
another member of the SJC, and
Sen. Barbara Boxer (D-CA), a member of
the Senate Commerce Committee, are also cosponsors.
Sen. Bill Frist (R-TN), the Senate Majority
Leader, and Sen. Tom Daschle (D-SD), the Senate
Minority Leader, are also cosponsors. The Nashville, Tennessee based music
industry is in Sen. Frist's state.
Sen. Frist stated in the Senate that this bill "addresses the growing problem of online piracy --
the illegal downloading of copyrighted music. Piracy is devastating the music
community and threatening other forms of copyrighted work."
He explained that "When I return home to Nashville and drive down Music Row, my heart sinks
as I see the ``For Sale´´ and ``For Rent´´ signs everywhere. The once vibrant
music community is being decimated by online piracy. No one is spared. It is
hitting artists, writers, record companies, performing rights organizations, and
He continued that "Every month 2.6 billion music files are illegally downloaded using
peer-to-peer networks, and it is not unusual for albums to show up on the
Internet before they make it to the record store. The effect of this theft of
intellectual property is disastrous to the creative industry. In the end,
rampant piracy dries up income and drives away professional musicians. We get
fewer artists and less music."
Sen. Frist added that "Online piracy affects more than just the music industry. It affects a
broad swath of the creative field, including the movie and software industries.
Music, movies, books, and software contribute well over half a trillion dollars
to the U.S. economy each year and support 4.7 million workers. When our
copyright laws are blatantly ignored or threatened, an enormous sector of our
economy and creative culture is threatened."
Sen. Hatch (at right)
stated in the Senate that "This Act will confirm that creative artists can sue
corporations that profit by encouraging children, teenagers and others to commit
illegal or criminal acts of copyright infringement."
During a lengthy address in the Senate he identified music P2P systems as
an intended target of the bill.
However, he also gave a long and scathing criticism of the Supreme Court's
Sony v. Universal City Studios, 464 U.S. 417 (1984), which is also known as the
Betamax case, and recent federal court opinions that have applied existing
concepts of secondary liability to P2P systems. In essence, he argued that the
Congress must legislate because the courts have failed in this area.
He reviewed the substantial non-infringing use holding in the Sony (Betamax)
case, and then stated that "Unfortunately, Sony also proposed that if this rule
proved problematic, Congress should alter it on a technology by technology
basis. This proposal was flawed: In 1976, Congress redrafted the Copyright Act
to avoid the need to re-adjust copyrights on a technology by technology basis
because legislation could no longer keep pace with technological change."
Sen. Hatch continued that 'Returning to this impractical technology based
approach would create an endless procession of ``tech-mandate´´ laws that
discriminate between technologies Congress deems ``good´´ or ``bad.´´ But
technologies are rarely inherently either ``good´´ or ``bad.´´ Most can be used
for either purpose; the effect depends on details of implementation impossible
to capture -- or predict -- in prospective legislation."
He also stated that "the dysfunctional corrective mechanism that Sony
proposed would have become problematic only if the Sony limitation was
misunderstood or misapplied by lower courts. Unfortunately, that has now
happened. In cases like Napster and Grokster, lower courts misapplied the
substantial non-infringing use limitation. These courts forgot about ``balance´´
and held that this limitation radically alters secondary liability. In effect,
these cases retained secondary liability's control prong but collapsed its
inducement prong. The results of these cases prove this point: Napster imposed
liability upon a distributor of copying devices who controlled infringing users;
Grokster did not impose liability upon distributors who appeared to induce and
profit from users' infringement."
On April 25, 2003, the U.S. District
Court (CDCal) issued its
opinion holding that Grokster's and Streamcast's P2P file copying networks
do not contributorily or vacariously infringe the copyrights of the holders of
music and movie copyrights. See also, story titled "District Court Holds No
Contributory or Vicarious Infringement by Grokster or Streamcast P2P Networks"
in TLJ Daily E-Mail
Alert No. 650, April 28, 2003; and
titled "Music Publishers File Appeal Brief in P2P Infringement Case", August 18,
Sen. Leahy (at
right) stated that "Our legislation treats those who induce others to violate copyrights as
infringers themselves. This is not a novel concept; it is the codification of a
long-standing principle of intellectual property law: that infringement
liability reaches not only direct infringers but also those who intentionally
induce illegal infringement. And while the legal principle is an old one, the
problems of inducement for copyright are a relatively new byproducts of the
digital age -- an age in which it is easy, and often profitable, to induce others
to violate copyrights through illegal downloading from the Internet."
Sen. Leahy also argued that "What the inducement bill does not do
is just as important as what it does:
It does not target technology. Useful legislation on this topic must address the
copyright issue and not demonize certain software. As a practical matter, if a
law is targeted at certain software, the designers will simply design around the
law and render it useless. And as a matter of effectiveness, if the law
addresses only well-understood present threats, it will necessarily be too
narrow to encompass future technologies that may pose the same threat to
copyrights. A law that deals simply with the copyrights -- and their violation --
is far less likely to be circumvented or
out-dated before it can do any good. It will be both broad enough and
sufficiently flexible to accommodate situations we cannot foresee."
He also said that "This legislation is also carefully crafted to preserve the doctrine of
``fair use.´´ ... Similarly, the bill will continue to promote the development of new technologies
as it will not impose liability on the manufacturers of copying technology
merely because the possibility exists for abuse. Finally, the bill will not
affect Internet service providers who comply with the safe harbor provisions of
the Digital Millennium Copyright Act."
And, Sen. Leahy argued that "the makers of electronic equipment, the software
vendors who sell email and other programs, the Internet service providers who
facilitate access to the Web -- all of these entities have nothing to fear from
this bill. So long as they do not conduct their businesses with the intention of
inducing others to break the law -- and I certainly have not heard from anyone
who makes that claim -- they should rest easy. The only actors who have anything
to fear are those that are already breaking the law; this bill simply clarifies
and codifies that long-standing doctrine of secondary liability."
Jack Valenti, President of the Motion Picture
Association of America (MPAA), issued a
statement praising the bill.
Robert Holleyman, P/CEO of the Business
Software Alliance (BSA), also praised the bill in a
release. He stated that "BSA applauds Senators Hatch and Leahy for their
leadership in introducing an important bill to stem the tide of illicit file
sharing which is enabling software piracy and causing substantial harm to our
Gary Shapiro, P/CEO of the Consumer Electronics
Association, does not like this bill. He stated in a
that "By establishing this new and vague cause of civil action, it essentially
gives content owners another tool in their arsenal to sue legitimate companies
over any device, software, home network, programming guide or database drawn
from or linked to copyrighted material that they deem objectionable ... This gun
hanging over the head of entrepreneurs, large and small, will stifle competition
and prevent the introduction of products and technologies we cannot even begin
|Senate Subcommittee Holds Hearing on P2P
6/23. The Senate Commerce
Committee's Subcommittee on Competition, Foreign Commerce, and Infrastructure held
a hearing titled "The Future of Peer to Peer (P2P) Technology".
Sen. Gordon Smith (R-OR) presided. He
wrote in his
opening statement that "It is conceivable that some consumers who first took
to the Internet when many services were free may have come to expect that all
services over the Internet are, or should be, free. To them, perhaps, P2P is
just ``free downloading.´´ To me, it looks a lot more like ``freeloading´´
-- or taking someone else's property without paying for it.
Even more disturbing to me, though, is the amount of pormographic material
that I’ve learned is traded over these P2P networks, and the relative ease with
which users may obtain it. Additionally, recent studies have shown that computer
viruses and software that poses risks to consumers’ privacy and security are
also prevalent on P2P networks.
Although I am very concerned about these aspects of P2P, I recognize that
there are some businesses using P2P networks to legitimately distribute content,
including software and music. Scientists also use P2P networks to aid their
collaborative efforts at medical research and global weather prediction – two
cases in which P2P helps them access data stored on colleagues’ computers
located throughout the world whenever they need it.
At the conclusion of
the hearing, Sen. Smith (at right) stated that "clearly, we would
rather that technology deal with this problem than legislation. But if necessary, we
will do legislation. We cannot stand idly by when there is wanton theft going
on. That is not the way free enterprise works. That is the way free loading
works. And, we cannot stand by when people, without asking it, are affronted
with the most horrendous kinds of pormography under the banners of baseball, or
Howard Beales, Director of the Federal
Trade Commission's (FTC) Bureau of Consumer Protection, wrote in his
testimony that "Downloading and using P2P file-sharing programs, however, sometimes
also creates significant risks for consumers. When consumers download P2P file-sharing
software programs, they may download other, unwanted, software, including spyware. The
Commission recently held a public workshop on spyware. Later this year, the FTC will
issue a comprehensive report addressing spyware, including the relationship between
P2P file-sharing software and spyware."
He added that "When consumers use P2P file-sharing software programs,
they face additional risks. Consumers may inadvertently place files with sensitive personal
information in their directory of files to be shared. Consumers may receive
files with viruses and other programs that could impair the operation of their
personal computers. Consumers may receive or redistribute files that may subject
them to civil or criminal liability under laws governing copyright infringement
Beales also stated that "Because of the way the files are labeled,
individuals, including children,
may be exposed to unwanted and disturbing images. The Commission is concerned
with the exposure of individuals, especially children, to unwanted pormographic
materials through deceptive practices."
testimony of John Rose (The EMI Group),
testimony of Michael Weiss (CEO of a company that distributes a P2P product),
[MS Word] of Les Ottolenghi (Intent MediaWorks), and
testimony of Curt Pederson (Oregon State University).
|AT&T and Bells Continue to Debate Unbundling
6/23. AT&T announced in a
that "it will stop competing for local and long-distance residential customers
in Ohio, Missouri, Washington, Tennessee, Louisiana, Arkansas and New
Hampshire". It asserted that "This action is a result of a June 9 decision by
the Administration and the FCC not to appeal a recent Federal court decision
that overturned FCC wholesale rules put in place to introduce competition in
local markets. The reversal of local competition policy by the Administration
will permit the Bell companies to raise wholesale rates as early as November.
This increase in wholesale rates means that AT&T will likely be unable to
economically serve customers with the competitive bundles currently available."
However, the final paragraph of this lengthy release states that AT&T "will continue
to serve its existing residential customers in the affected states, and that its
announcement today does not affect its enterprise, government and other small-
and medium-sized business customers. It will also not affect customers with DSL
and cable modem offerings who subscribe to the company's Voice over IP
Walter McCormick, P/CEO of the U.S. Telecom
Association (USTA), which represents incumbent local exchange carriers (ILECs),
responded in a
release that "AT&T is engaged in sleight of hand. It claims it will no
longer compete with telephone, cable, wireless companies and other CLECs in
offering voice service to residential consumers. But in the very same press
release, it announces that it will serve the more profitable business markets
and will offer to residential consumers its new, high margin voice-over-Internet
product in the same states that it says it is withdrawing from! This appears to
be a political statement directed at presidential battleground states, rather
than a real business announcement."
BellSouth responded that AT&T's
announcement "is more a statement of "how" they intend to compete going forward,
than "whether" they intend to compete going forward." It adds that "AT&T's
announcement is a political campaign. In reality, this has nothing to do with
the Solicitor General's announcement. The seven states covered by the
announcement are all seen by political analysts as undecided states in the
presidential election. The tone and text of their release are political threats.
If AT&T chooses to exit markets in which it finds itself unable to compete due
to the robust levels of competition, then so be it. But let's not confuse the
issue as a one of consumer protection."
SBC offered the following analysis: "Local phone competition without AT&T is
like a fish without a bicycle." See, SBC
SBC added that "This cheap PR stunt should be seen for what it is: political
grandstanding aimed at intimidating policymakers and elected officials
everywhere. Nothing has changed in the market -- AT&T is paying the same price
today as it did last month, and will through the end of the year. Moreover, the
FCC is in the process of making new lawful rules for the industry. AT&T's
political games are transparent. Its customers should ask themselves whether
they even want to do business with a company that uses them as pawns in the game
This debate relates to the opinion of the
U.S. Court of Appeals (DCCir)
in USTA v. FCC. This March 2, 2004,
[62 pages in PDF] overturned parts of the FCC's
triennial review order [576 pages in PDF], which addressed the unbundling
requirements of ILECs under
47 U.S.C. § 251.
story titled "Appeals Court Overturns Key Provisions of FCC Triennial Review
Order" in TLJ Daily
E-Mail Alert No. 848, March 3, 2004.
On June 9, 2004 the Office of the
Solicitor General announced that it would not appeal the case to the Supreme
story titled "Solicitor General Will Not Seek Supreme Court Review in USTA II"
in TLJ Daily E-Mail Alert No. 915, June 10, 2004.
|House Commerce Committee to Mark Up Spyware
6/23. The House Commerce Committee
is scheduled to mark up
the "Safeguard Against Privacy Invasions Act" or "SPY Act" at a
meeting beginning at 9:30 AM on Thursday, June 24. This is
Rep. Mary Bono's (R-CA) spyware bill.
The Subcommittee on Commerce, Trade, and Consumer Protection approved an
amendment in the nature of a substitute [18 pages in PDF] on June 17, 2004. See
titled "House Subcommittee Approves Spyware Bill" in TLJ Daily E-Mail Alert No.
922, June 21, 2004.
The Committee has continued its work on the bill since the Subcommittee
markup. The full Committee will likely approve a version of the bill with
However, some groups still have reservations. For
example, Harris Miller, President of the Information
Technology Association of America (ITAA) stated in a June 23
Rep. Joe Barton (R-TX) and
Rep. John Dingell (D-MI), who are the
Chairman and ranking Democrat on the Committee, that the ITAA has reservations about the
bill. He wrote that "a regulatory approach to all interactive software could undermine
the consumer interest by clinging to technologically obsolete text-based notice formulas,
rather than incorporating the benefits of innovation in a rapidly changing field".
Miller continued that "One of the reasons that industry is concerned about
newly proposed legislation curtailing technologies known today as spyware is that there
exist many good uses of similar technologies, recently termed ``supportware,´´ that could
be considered spyware by some definitions. ``Supportware´´ is a term that refers to
Internet-based software technologies that update, renew, and monitor programs residing
on the computer user’s system to provide a better service to them and to enhance
overall computer user satisfaction."
He added that "we believe that the current bill will generate a
veritable blizzard of legally mandated pop-up notices that only a lawyer would
love. The proposed legislation goes beyond addressing the problem of Spyware to
create a new Federal regulatory regime at the Federal Trade Commission for the
online software distribution."
The Committee is also scheduled to mark up
the "Junk Fax Prevention Act of 2004", and several non-technology related
bills, at the same meeting.
|Washington Tech Calendar
New items are highlighted in red.
|Thursday, June 24
The House will meet at 10:00 AM. See,
9:00 AM. The Senate Governmental
Affairs Committee will hold the second part of its hearing titled "Buyer
Beware: The Danger of Purchasing Pharmaceuticals Over The Internet". See,
Location: Room 342, Dirksen Building.
9:30 AM. The
House Commerce Committee will
meet to mark up several bills, including
the "Junk Fax Prevention Act of 2004" and
the "Safeguard Against Privacy Invasions Act" or "SPY Act". This is
Rep. Mary Bono's (R-CA) spyware bill.
The meeting will be webcast by the Committee. See,
notice. The Subcommittee on Commerce, Trade, and Consumer Protection approved an
amendment in the nature of a substitute [18 pages in PDF] on June 17, 2004. See,
"House Subcommittee Approves Spyware Bill" in TLJ Daily E-Mail
Alert No. 922, June 21, 2004. The meeting will be webcast by the Committee. Press contact:
Larry Neal or Samantha Jordan at 202 225-5735. Location: Room 2123, Rayburn Building.
9:30 AM. The
Senate Judiciary Committee will
hold a business meeting. See,
notice. Press contact: Margarita Tapia (Hatch) at 202 224-5225 or
David Carle (Leahy) at 202 224-4242. Location: Room 226, Dirksen Building.
12:15 - 2:00 PM. The DC Bar Association's
Arts, Entertainment and Sports Law Section will host a lunch titled "Indecent
Exposure: Broadcast Standards and the First Amendment". The speakers will be
Lee Carosi (Majority Counsel, Senate Commerce
Committee) Thomas Carpenter (American Federation of
Television and Radio Artists),
Corn-Revere (Davis Wright & Tremaine), Kelly
Zerzan (Majority Counsel, House Commerce
Committee), and John Davis Malloy. Prices vary. See,
For more information, call 202-626-3463. Location:
Jenner & Block, 601 13th Street, NW, Concourse
12:30 PM. The Federal
Communications Bar Association (FCBA) will hold its Annual Meeting and Luncheon.
The speaker will be Federal Communications Commission
(FCC) Commissioner Kathleen
Abernathy. Location: J.W. Marriott, 1331 Pennsylvania Ave., NW.
2:00 - 4:00 PM. The
House Science Committee's
Subcommittee on Environment, Technology, and Standards will hold a hearing
titled "Testing and Certification for Voting Equipment: How Can the Process
Be Improved?" Location: Room 2318, Rayburn Building.
4:00 PM. The
House Judiciary Committee's
Subcommittee on Courts, the Internet, and Intellectual Property will hold a hearing
titled "Patent Quality Improvement: Post-Grant Opposition". The
hearing will be webcast by the Committee. Press contact: Jeff Lungren or Terry Shawn
at 202 225-2492. Location: Room 2141, Rayburn Building.
Deadline to submit comments to the
Federal Trade Commission (FTC) to assist it
in preparing its report (which is required by the Fairness to Contact Lens
Consumers Act, 15 U.S.C. § 7601 et seq.) on the
strength of competition in the sale of prescription contact lenses. See,
notice in the Federal Register, April 22, 2004, Vol. 69, No. 78, at Pages
21833 - 21836.
Deadline to submit reply comments to the
Federal Communications Commission (FCC) in response to its notice of
proposed rule making (NPRM) regarding expanding the disruption reporting
requirements beyond wireline carriers. See,
notice in the March 26, 2004, Vol. 69, No. 59, at Pages 15761 - 15774.
|Friday, June 25
The House will meet at 9:00 AM. See,
5:45 - 8:00 PM. The Federal Communications
Bar Association (FCBA) Cable Committee and Legislation Committee will hold a joint
brown bag lunch. The speakers will be majority and minority counsel for the
House Commerce Committee. RSVP to Wendy
Parish at email@example.com. Location:
Willkie Farr & Gallagher, 1875 K Street, NW.
Deadline to submit reply comments to the
Federal Communications Commission (FCC) in response
to its notice of proposed rulemaking (NPRM) regarding presubscribed interexchange
carrier (PIC) change charge policies. This NPRM is FCC 04-96 in CC Docket No. 02-53. See,
notice in the Federal Register, May 26, 2004, Vol. 69,
No. 102, at Pages 29913 - 29917.
|Monday, June 28
The House and Senate will not meet on June 28 through July 5.
The Supreme Court will return from the recess that
it began on June 21.
1:00 PM. The Center
for Democracy and Technology (CDT) will host a telephone press conference
to discuss the Supreme Court's opinion in Ashcroft v. ACLU, a
challenge to the constitutionality of the Child Online Protection Act (COPA).
If the Supreme Court does not issue the opinion on this date, then the CDT
will reschedule this conference for the next likely date for the issuance of
the opinion -- June 28. To participate, call 334 260-2557 and provide security
Deadline to submit reply comments to the Federal
Communications Commission (FCC) in response to its
proposed rulemaking (NPRM) [97 pages in PDF] regarding issues relating to services
and applications utilizing internet protocol (IP). This NPRM is FCC 04-28 in WC
Docket No. 04-36. See,
notice in the Federal Register, March 29, 2004, Vol. 69, No. 60, at Pages 16193 -
16202. See also, story titled "FCC Adopts NPRM Regarding Regulation of Internet
Protocol Services" in
TLJ Daily E-Mail
Alert No. 837, February 16, 2004.
Deadline to submit comments to the Federal
Communications Commission (FCC) in response to its notice of proposed rulemaking
(NPRM) regarding changes to the FCC Form 477 local competition and broadband data
gathering program. This NPRM is FCC 04-81 in WC Docket No. 04-141. See,
notice in the Federal Register, May 27, 2004, Vol. 69, No. 103, at Pages
30252 - 30277.
|Tuesday, June 29
2:00 - 4:00 PM. There will be a meeting of the WRC-07
Advisory Committee, Informal Working Group 5: Regulatory Issues. See, FCC
notice [PDF]. Location: The Boeing
Company, 1200 Wilson Blvd., Arlington, VA.
3:00 - 5:00 PM. The
American Enterprise Institute (AEI) will host a panel
discussion titled "Terror, Torts, and Teleco: The Supreme Court's 2003-2004
Term". The speakers will be Viet Dinh (Georgetown University Law Center), Richard
Garnett (Notre Dame Law School), Edward Warren (Kirkland & Ellis), and Michael Greve
notice and registration page. Location: AEI, Twelfth floor, 1150 17th St., NW.
The Defense Science Board Task Force on Global Positioning System will
hold a closed meeting to discuss Galileo and other future radio navigation satellite
notice in the Federal Register, May 18, 2004, Vol. 69, No. 96, at Pages 28125 -
28126. Location: Strategic Analysis Inc., 3601 Wilson Boulevard, Arlington, VA.
|Wednesday, June 30
12:15 PM. The Federal
Communications Bar Association's (FCBA) Mass Media Practice Committee will host a
brown bag lunch. The speaker will be Ken Ferree, Chief of the Federal
Communications Commission's (FCC) Media
Bureau. Location: 8th Floor Conference Room,
Dow Lohnes & Albertson, 1200 New Hampshire
2:00 PM. The Japan International
Transport Institute and the Ministry of Land, Infrastructure and Transport will host
a conference titled "Aviation Security of Tomorrow". There will be a technology
demonstration from 1:00 - 7:00 PM that will feature an IPv6-based secure peer-to-peer
communication service platform, information secrecy management solutions using a
multi-purpose smartcard, and radio frequency tags. The speakers will include
Hutchinson, Under Secretary for Border and Transportation Security at
the U.S. Department of Homeland Security. Masayuki Nomura (NTT
Communications Corporation) will give a technology demonstration. There will
be a reception from 5:30 - 7:00 PM. See,
page. Registration is required by June 25. Location: Grand Hyatt
Washington, 1000 H Street, NW.
Deadline to submit comments to the Financial
Accounting Standards Board (FASB) regarding its
titled "Exposure Draft, Share-Based Payment, an Amendment of FASB Statements No.
123 and 95", in which it proposes to that companies must expense employee stock
Deadline to submit applications to the
Department of Homeland Security (DHS) for
grants for homeland security related information technology demonstration
projects. See, DHS
The research and development tax credit provision of the Internal
Revenue Code expires. Both the House and Senate bills to repeal the ETI tax regime
would extend the R&D credit through December 31, 2005. The House has passed its bill,
the "American Jobs Creation Act of 2004". The Senate has passed its bill,
the "Jumpstart Our Business Strength (JOBS) Act". However, the two bills have
not been reconciled.
|Senators Address Impending Expiration of R&D
6/23. Sen. Charles Grassley (R-IA),
the Chairman of the Senate Finance
Committee (SFC), Sen. Max Baucus
(D-MT), the ranking Democrat on the SFC, and Sen.
Orrin Hatch (R-UT), a senior member of the SFC, issued a statement regarding the
impending expiration of the research and development tax credit. The credit is scheduled
to expire on June 30, 2004.
Both the House and Senate bills to repeal the extraterritorial income (ETI)
tax regime, to comply with World Trade Organization
(WTO) rulings, would also extend the
R&D credit through December 31, 2005. The House has passed its bill,
the "American Jobs Creation Act of 2004", last week. The Senate has passed its bill,
the "Jumpstart Our Business Strength (JOBS) Act", in May. However, the two bills have
not yet been reconciled.
The three Senators stated that "We want to take this opportunity to
remind our colleagues of the importance of research and development to the growth of our
economy and to improvements in our future standard of living. Research and development
has a proven track record of creating jobs. If we want to keep these high-paying R and
D jobs in America, we need to bolster the research tax credit by extending and
expanding it. Furthermore, many of the things that we benefit from now --
life-saving drugs and life-sustaining medical treatments; computers and software
that make us more productive in the workplace; advances that make transportation
safer and more energy efficient; and technologies that enable our military to
effectively and safely carry out its responsibilities -- are the direct result of
long-term, high-risk investments in research and development made by American
They added that "The research tax credit helped make many of those long-term
investments financially feasible. It must be extended expeditiously and
seamlessly. We must fill in any lapse between expiration of the credit and
enactment of an extension, so that companies that have planned research projects
while counting on the research credit can continue those projects with
confidence. It is our intention to work in conference for a provision effective
retroactively to the date of the credit's expiration. In the JOBS Act, the
Senate voted unanimously not only to extend the credit, but also to strengthen
it. We need a stronger credit signed into law so that the American economy,
American workers, and American citizens can benefit from the additional research
activities made possible by a strong research tax credit."
6/23. The House Commerce
Committee's Subcommittee on Telecommunications and the Internet held a hearing
titled "Protecting Homeland Security: A Status Report on Interoperability Between
Public Safety Communications Systems". See,
prepared testimony of David Boyd (Department of Homeland Security),
prepared testimony of Gary Grube (Motorola),
prepared testimony of Robert Legrande (District of Columbia), and
prepared testimony of John Muleta (Chief of the Federal Communications
Commission's Wireless Telecommunications
6/23. The U.S. Court of Appeals
(11thCir) issued its
[PDF] in Rolling Greens MHP v.
Comcast SCH Holdings, L.L.C. The sole issue in this opinion is what is
the citizenship of a limited liability company for the purpose of determining
whether a federal court has jurisdiction based upon diversity of
citizenship of the parties. The Appeals Court held, "The federal appellate courts that have
answered this question have all answered it in the same way: like a limited
partnership, a limited liability company is a citizen of any state of which a
member of the company is a citizen. We join them in this holding." Rollings
Greens MHP had appealed the summary judgment against it. The Appeals Court
addressed the jurisdictional issue sua sponte. This case is Rolling Greens
MHP v. Comcast SCH Holdings, L.L.C., U.S. Court of Appeals for the 11th
Circuit, App. Ct. No. 03-15917, an appeal from the U.S. District Court for the
Middle District of Florida, D. C. No. 03-00022-CV-OC-10GRJ.
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