6/30. The U.S. Court of Appeals (5thCir) issued its opinion [11 pages in PDF] in AT&T v. Public Utility Commission of Texas, holding that the Texas universal service tax on multijurisdictional carriers' revenue from interstate and international calls is discriminatory and inequitable, and preempted by 47 U.S.C. § 254. This opinion affirms the District Court.

In 1997 the Texas Public Utilities Commission (TPUC) imposed a 3.6% tax on all telecommunications carriers who provide any intrastate service, to fund its subsidy program titled the "Texas Universal Service Fund" (TUSF). The TPUC collected this tax on all revenue of these carriers derived from intrastate, interstate, and international calls originating in Texas.

The Federal Communications Commission (FCC) has imposed a tax on interstate carriers. AT&T pays universal service taxes to both the FCC and the TPUC for certain revenues derived from telephone calls that originate in Texas.

AT&T and its Texas subsidiary filed a complaint in U.S. District Court (WDTex) against the TPUC and its individual Commissioners, in their official capacities, alleging that the TPUC tax is preempted by 47 U.S.C. § 254, the universal service section of the Communications Act that was enacted as part of the Telecommunications Act of 1996.

The District Court granted summary judgment to AT&T. It held that the TPUC taxation of revenues derived from both interstate and intrastate calls is inequitable and discriminatory because it burdens multijurisdictional carriers more harshly than their pure interstate competitors.

This appeal followed. The Court of Appeals affirmed.

47 U.S.C. § 254(d) gives the FCC authority to tax "interstate" telecommunications carriers. It provides, in part, that "Every telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service. ... "

47 U.S.C. § 254(f) gives the states authority to tax "intrastate" telecommunications carriers. It provides, in full, that "A State may adopt regulations not inconsistent with the Commission's rules to preserve and advance universal service. Every telecommunications carrier that provides intrastate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, in a manner determined by the State to the preservation and advancement of universal service in that State. A State may adopt regulations to provide for additional definitions and standards to preserve and advance universal service within that State only to the extent that such regulations adopt additional specific, predictable, and sufficient mechanisms to support such definitions or standards that do not rely on or burden Federal universal service support mechanisms."

The Appeals Court wrote that the federal state "dual universal service scheme allows the FCC to tax interstate service providers to fund federal universal service programs and allows the States to tax intrastate providers to fund the state universal service programs."

However, it added that § 254 "has no provision for treatment of multijurisdictional carriers, i.e., carriers that provide both intrastate and interstate service. Congress's omission on that issue is the source of the conflict in this case."

The Appeals Court, like the District Court, held that the Texas scheme is "discriminatory or inequitable". The Appeals Court wrote that "Given the state taxation scheme multijurisdictional carriers will be forced to pay an approximate 11% tax on their revenue derived from interstate telecommunications calls, while their pure-interstate-provider competitors pay only the 7.28% federal tax on interstate revenues. The result is a taxation scheme that is clearly unfair and discriminates between telecommunication service providers based solely upon their presence in the intrastate market."

It added that "Regardless of the amount of intrastate revenues a carrier earns, the double taxation of interstate revenue puts multijurisdictional carriers at a distinct competitive disadvantage compared with the pure interstate carriers. The funding mechanism, therefore, burdens multijurisdictional carriers more severely than pure interstate or intrastate carriers."

The Court concluded that "tax on both interstate and intrastate calls creates an inequitable, discriminatory, and
anti-competitive taxation scheme. Given the parallel language used in §§ 254(d) and (f), we conclude, ... that the PUC taxation of interstate and international calls is discriminatory, conflicts with § 254(f), and thus is preempted
by federal law."

The Court did not reach several other appeal issues, including a dormant commerce clause argument.

This case is AT&T v. Public Utility Commission of Texas, et al., U.S. Court of Appeals for the 5th Circuit, App. Ct. No. 03-50454, an appeal from the U.S. District Court for the Western District of Texas.

7/2. The U.S., United Kingdom, and Australia entered into a Memorandum of Understanding [11 pages in PDF] regarding cooperation in fighting spam e-mail.

It provides that the three nations "intend to use best efforts to exchange and provide appropriate information in relation to: consumer and business education; investigations and research in relevant areas, including the practices of address harvesting and dictionary attacks; speeches; research papers; journal articles; compliance education programs; self regulatory and technical enforcement solutions; amendments to relevant legislation; and staffing and resource issues, including the possibility of staff exchanges and visits."

It also provides that they "intend to use best efforts to assist one another and to cooperate on a reciprocal basis
  1. in providing or obtaining Evidence that could assist in determining whether a Person has committed or is about to commit a Spam Violation; or
  2. in facilitating the administration or enforcement against Spam Violations."

It also provides that they "intend to use their best efforts to inform each other as soon as practicable about Spam Violations occurring or originating in the Territory of the United States, the United Kingdom, or Australia, or that affect consumers in the Territory of the United States, the United Kingdom, or Australia."

7/6. Jerry Berman, President of the Center for Democracy and Technology (CDT), wrote a letter [2 pages in PDF] to Sen. Orrin Hatch (R-UT) and Sen. Patrick Leahy (D-VT), the Chairman and ranking Democrat on the Senate Judiciary Committee, regarding S 2560, the "Inducing Infringement of Copyrights Act of 2004".

Sen. Hatch, Sen. Leahy and others introduced this bill on June 22, 2004. It would create a new cause of action for "intentional inducement of 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. Bill Frist (R-TN) stated in the Senate, that the intended target of the bill is the distributors of the peer to peer systems that are used to infringe copyrighted music.

See, story titled "Senators Introduce Bill to Amend Copyright Act to Ban Inducement of Infringement" in TLJ Daily E-Mail Alert No. 925, June 24, 2004.

The CDT's Berman wrote that "there appears to be a great deal of confusion as to just what activities by a technology developer might give rise to potential inducement liability. Might the makers of high-capacity music players or DVD-burners be liable under the bill? Could Internet service providers or computer manufacturers be potential targets for use of their products and services for illegal infringement? Will this new private right of action, available to millions of copyright holders, create litigation risks that chill innovation in valuable new technologies, undermining the important principles laid out in Sony? There appears to be a great deal of uncertainty about whether the bill, as drafted, is sufficiently limited in its impact to the file-sharing applications at which we understand it is aimed."

The Senate Judiciary Committee has not yet held or scheduled a hearing on this bill.

7/6. The House Rules Committee adopted a rule for consideration of HR 4754, the "Commerce, Justice, State and the Judiciary Appropriations Act, 2005".

7/1. Microsoft announced in a release that it settled a class action law suit pending in the state of Vermont in which the class representatives alleged that Microsoft violated Vermont's consumer fraud act. The settlement provides that Microsoft will make vouchers with a total value of $9.7 Million available to class members to buy any manufacturer's desktop, laptop and tablet computers, any software available for sale to the general public and used with those computer products, and specified peripheral devices.

6/24. Federal Communications Commission (FCC) Commissioner Kathleen Abernathy gave a speech [PDF] at an annual meeting of the Federal Communications Bar Association (FCBA).

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The House will meet at 10:00 AM. It may consider HR 4218, the "High-Performance Computing Revitalization Act of 2004", and HR 4516, "Department of Energy High-End Computing Revitalization Act of 2004". See, Republican Whip notice.

The Senate will meet at 9:30 AM. It will resume consideration of S 2062, the "Class Action Fairness Act of 2004".

10:00 AM. The House Judiciary Committee will meet to mark up two bills, including HR 4518, the "Satellite Home Viewer Extension and Reauthorization Act of 2004". The meeting will be webcast by the Committee. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.

10:00 AM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "Voice Over Internet Protocol Services: Will the Technology Disrupt the Industry or Will Regulation Disrupt the Technology?". The witnesses will be Jeffrey Carlisle (FCC's Wireline Competition Bureau), Jeffrey Citron (Vonage), Margaret Greene (BellSouth), Michael Jensen (Great Plains Communications), James Kirkland (Covad Communications), Cathy Dolecki (AT&T), Robert Nelson (Michigan Public Service Commission), Thomas Rutledge (Cablevision), and Ronald Vidal (Level 3 Communications). The hearing will be webcast. Press contact: Jon Tripp (Barton) at 202 225-5735, or Sean Bonyun at 202-225-3761. Location: Room 2123, Rayburn Building.

10:00 AM. The House Ways and Means Committee will hold a hearing titled "Implementation of the United States-Morocco Free Trade Agreement". Location: Room 1100, Longworth Building.

10:00 AM. House Republicans will hold a press conference titled "GOP Leaders to Tout Package Aimed at Spurring Innovation". The participants will include Rep. Tom DeLay (R-TX) (House Majority Leader), Rep. Deborah Pryce (R-OH) (House Republican Conference Chairman), Rep. Eric Cantor (R-VA) (Chief Deputy Whip), Rep. Sherwood Boehlert (R-NY) (Chairman of the Science Committee), Rep. Todd Tiahrt (R-KS), and Rep. Pete Sessions (R-TX). For more information, contact Greg Crist or Anne Buresh at 202-226-9000. Location: Room HC-6, Capitol Building.

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

11:00 AM. Howard Beales, Director of the Federal Trade Commission's (FTC) Bureau of Consumer Protection will host an event described by the FTC as follows: "Press availability to announce settlement of a case with an Internet retailer that pledged to keep customer information private, but changed its policy and sold its customer lists, including information about kids, to target marketers". The FTC notice adds that "Reporters who cannot attend can participate by calling 800-497-7708. Chairperson: Bruce Jennings, Confirmation Number 24921589". Press contact: 202-326-2180. Location: Room 481, FTC, 600 Pennsylvania Ave., NW.

12:15 - 1:45 PM. The New America Foundation (NAF) will host a brown bag lunch titled "Cyberterrorism: How Modern Terrorism Uses the Internet". The speakers be Gabriel Weimann (Haifa University) and James Fallows (Atlantic Monthly). RSVP to Jennifer Buntman at 202 986-4901 or buntman@newamerica.net. Location: NAF, 1630 Connecticut Ave, NW, 7th Floor.

The House will meet at 10:00 AM. See, Republican Whip notice.

9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. See, agenda [PDF]. The event will be webcast. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

9:30 AM. The Senate Judiciary Committee will hold an executive business meeting. Press contact: Margarita Tapia (Hatch) at 202 224-5225 or David Carle (Leahy) at 202 224-4242. See, notice. Location: Room 226, Dirksen Building.

10:00 AM. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property will meet to mark up HR 4586, the "Family Movie Act of 2004". The meeting will be webcast by the Committee. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.

10:00 AM. The House Ways and Means Committee will meet to mark up HR 4759, the "United States-Australia Free Trade Agreement Implementation Act". Location: Room 1100, Longworth Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Business Objects v. MicroStrategy, No. 04-1009. Location: Courtroom 203, 717 Madison Place, NW.

The Department of Commerce's (DOC) Bureau of Industry and Security will hold a seminar titled "Essentials of Export Controls". The price to attend is $75. For more information, contact Yvette Springer at 202 482-6031. Location: Ronald Reagan Trade Center, Washington DC.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding a national one call notification system. The FCC adopted this NPRM on May 13, 2004, and released the text [34 pages in PDF] on May 14, 2004. See, story titled "FCC Adopts NPRM Regarding One Call Notification System" in TLJ Daily E-Mail Alert No. 899, May 17, 2004. This NPRM is FCC 04-111 in CC Docket No. 92-105. See, notice in the Federal Register, June 8, 2004, Vol. 69, No. 110, at Pages 31930 - 31939.

The House is scheduled to meet at 9:00 AM. See, Republican Whip notice.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Chamberlain Group v. Skylink Technologies, No. 04-1118. Location: Courtroom 402, 717 Madison Place, NW.

12:00 NOON. The Cato Institute will host a panel discussion titled "Recommendations for Tort and Class Action Reform". The speakers will be Robert Levy and Mark Moller, both of Cato. Lunch will be served. See, notice and registration page. Location: Room B-339, Rayburn Building.

The Department of Commerce's (DOC) Bureau of Industry and Security will hold a seminar titled "Export Management Systems". The price to attend is $100. For more information, contact Yvette Springer at 202 482-6031. Location: Ronald Reagan Trade Center, Washington DC.

Extended deadline to submit comments to the Federal Trade Commission (FTC) for its June 21, 2004 workshop on the uses, efficiencies, and implications for consumers associated with radio frequency identification (RFID) technology. See, original notice in the Federal Register, April 15, 2004, Vol. 69, No. 73, at Pages 20523 - 20525, and notice [PDF] in the Federal Register (May 24, 2004, Vol. 69, No. 100, at Pages 29540 - 29541) extending the deadline to July 9. See also, FTC web page for this workshop.

10:00 AM. The Heritage Foundation will host two panel discussions titled "Scholars & Scribes Review the Rulings: The Supreme Court's 2003-2004 Term". See, notice and registration page. Location: 214 Massachusetts Ave., NE.

6:00 - 8:15 PM. The DC Bar Association's Intellectual Property Law Section, and other sections, will host a continuing legal education (CLE) program titled "Trade Secrets: The Next Level". The speaker will be Milton Babirak of the law firm of Babirak Vangellow & Carr. Prices vary. See, notice. For more information, contact 202-626-3488. Location: D.C. Bar Conference Center, B-1 Level, 1250 H Street, NW.

6:30 PM. The U.S. Telecom Association (USTA) and the Cellular Telecommunications and Internet Association (CTIA) will host an event titled "Communications Good Scout Award Dinner". The dinner will honor Rep. Fred Upton (R-MI), the Chairman of the Subcommittee on Telecommunications and the Internet. The price to attend ranges from $250 to $20,000. Proceeds will go to the National Capital Area Council of the Boy Scouts of America. Location: Renaissance Washington Hotel, 999 9th Street, NW.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its further notice of proposed rulemaking (FNPRM) regarding Aviation Radio Service. This FNPRM is FCC 03-238 in WT Docket No. 01-289. See, notice in the Federal Register, April 12, 2004, Vol. 69, No. 70, at Pages 19140 - 19147.

9:30 AM. The North American Numbering Council (NANC) will meet. Location: Federal Communications Commission (FCC), 445 12th Street, SW, Room TW-C305.

8:30 AM - 12:00 NOON. The DC Bar Association's Intellectual Property Law Section will host a program titled "The ABC's Of Patent, Trademark And Copyright Law". The speakers will be Steven Warner (Fitzpatrick Cella Harper & Scinto), Gary Krugman (Sughrue Mion), John Hornick (Finnegan Henderson), and Aoi Nawashiro (Browdy & Neimark). Prices vary. A breakfast buffet is included. See, notice. For more information, call 202 626-3463. Location: D.C. Bar Conference Center, B-1 Level, 1250 H Street, NW.

9:00 AM - 1:30 PM. The National Telecommunications and Information Administration (NTIA) will host an event titled "Kids.us Forum: Developing a Safe Place on the Internet for Children". See, NTIA notice and notice in the Federal Register, June 4, 2004, Vol. 69, No. 108, at Pages 31590-31591. Location: Department of Commerce, 1401 Constitution Ave., NW, Room 4830.