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July 26, 2004, 9:00 AM ET, Alert No. 945.
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Sen. Wyden Blocks FTC Nominees

7/22. The Senate Commerce Committee (SCC) held a meeting, the agenda of which included consideration of the nominations of Deborah Majoras and Jonathan Liebowitz to be Federal Trade Commission (FTC) Commissioner. The Committee did not vote on either nomination, because Sen. Ron Wyden (D-OR) invoked the Senate's two hour rule.

Sen. Ron WydenMajoras would replace the current Chairman, Timothy Muris. Leibowitz would fill a Democratic position on the FTC.

Majoras' nomination is opposed by Sen. Wyden (at right) and Sen. Barbara Boxer (D-CA). While the FTC handles many technology related issues, the delay of consideration of these nominees is not technology related. On June 2, the SCC held a hearing on these nominations at which Sen. Wyden and Sen. Boxer explained at length that their opposition relates to gasoline prices. See, story titled "Senate Commerce Committee Holds Hearing on FTC Nominees" in TLJ Daily E-Mail Alert No. 910, June 3, 2004.

Sen. Wyden stated on July 22 that "I fully expect the next chair of the Federal Trade Commission to immediately get in the game on the issue of gasoline prices, and this nominee has significant and ongoing conflicts of interest regarding one of the nation's biggest oil companies." See, Wyden release.

Sen. Wyden invoked the 2 hour rule. Rule XXVI of the Standing Rules of the Senate, at paragraph 5(a), provides, in part, that "Notwithstanding any other provision of the rules, when the Senate is in session, no committee of the Senate or any subcommittee thereof may meet, without special leave, after the conclusion of the first two hours after the meeting of the Senate commenced and in no case after two o'clock postmeridian unless consent therefor has been obtained from the majority leader and the minority leader (or in the event of the absence of either of such leaders, from his designee)." (Parentheses in original.).

This is a rarely invoked measure. When it is invoked, it is usually a last ditch dilatory effort by a Senator who lacks the votes to stop or delay a measure by democratic means.

Sen. Trent Lott (R-MS) invoked the 2 hour rule to limit a Senate Commerce Committee meeting on May 16, 2002.

It is possible that President Bush would give recess appointments to Majoras and Leibowitz. Article 2, Section 2, paragraph three of the U.S. Constitution provides that "The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session."

There would be some irony in this. If this were to occur, a Republican President would give a recess appointment to Liebowitz, a nominee selected by the Democratic leadership, to get around obstructionist tactics of Democrats.

Rep. Cox Urges Bush to Instruct IRS Not to Expand Excise Tax on Phones

7/7. Rep. Chris Cox (R-CA) wrote a letter to President Bush regarding the Internal Revenue Service's (IRS) efforts to expand the existing excise tax on telephones to apply to new technologies, such as voice over internet protocol (VOIP). Rep. Cox urged the President "to direct the IRS immediately to affirm that this 100-year-old tax does not apply to the Internet, but only to traditional analog voice services".

On July 2, 2004 the Internal Revenue Service (IRS) published a vaguely worded and short notice in the Federal Register which it identified as an "advance notice of proposed rulemaking". This notice stated that the IRS seeks comments on expanding the current three percent excise tax on telephone service to new "communications services" to "reflect changes in technology".

The notice reveals that the IRS may be considering promulgating a rule that expands the tax to include any or all voice over internet protocol (VOIP) services, applications, or technologies, or any other IP based communications. See, story titled "IRS Publishes Advance NPRM Regarding Expanding the Excise Tax on Telephones to Include New Technologies" in TLJ Daily E-Mail Alert No. 931, July 6, 2004.

26 U.S.C. § 4251 provides that "There is hereby imposed on amounts paid for communications services a tax equal to ... 3 percent".

The IRS notice asserts that "Since 1965, numerous communications services have been developed and marketed, the methods of transmission have expanded, and the industry has been deregulated. As a result of these changes, questions have arisen concerning the application of section 4251 to certain communications services that were not available in 1965. In response to these questions, Treasury and the IRS are considering proposing regulations that would revise the existing regulations to reflect changes in technology."

The IRS's notice adds that the purpose of the notice is "to solicit information from the public on how present technology should be treated within the description of telephonic or telephonic quality communication in the definitions of local and toll telephone service under section 4252." See, Federal Register, July 2, 2004, Vol. 69, No. 127, at Page 40345.

rightRep. Cox (at right), who is the Chairman of the Homeland Security Committee, and a senior member of the House Commerce Committee, and its Subcommittee on Telecommunications and the Internet, wrote to President Bush that "Your advocacy of a permanent ban on Internet access taxes and your determination to remove regulatory obstacles to broadband deployment are critical ingredients in America’s continued economic success. Yet as clear as your clarion call for freedom and innovation has been, it appears that some in the administration still aren't getting the message."

Rep. Cox wrote that "The attached story from describes an IRS decision to consider putting new taxes on the Internet -- specifically, by extending to the Internet the Spanish-American War Tax on telephone service enacted more than one hundred years ago." See, story by Declan McCullagh titled "IRS eyes Net phone taxes".

Rep. Cox added that "Ironically, Republicans in Congress have been working hard to abolish this tax completely. When it comes to consumer excise taxes, only alcohol and tobacco are taxed more heavily at the federal level than phone service. Telephone customers are then hit with state and local tax rates that can run up to three times the rates paid on other goods."

He concluded that "I can think of few initiatives that would do more to impede the Bush broadband agenda than extending the Spanish-American War Tax to Internet telephony. I urge you to direct the IRS immediately to affirm that this 100-year-old tax does not apply to the Internet, but only to traditional analog voice services."

DC Circuit Reverses in CCI v. FCC

7/23. The U.S. Court of Appeals (DCCir) issued its opinion [12 pages in PDF] in Communications and Control, Inc. v. FCC, reversing and remanding the FCC's decision not to correct an error in the longitude of a broadcast license where the error was obvious on its face. The latitude and longitude in the application placed the transmitter in the Pacific Ocean.

In 1993 the Federal Communications Commission (FCC) granted Communications and Control, Inc. (CCI) a broadcast license to operate a non-nationwide Phase I 220 MHz trunked radio system under the call sign WPCX448. CCI's application provided a latitude and longitude, and the location of Mount Allison, Milpitas, California. The application contained an error of one degree in the longitude. The error placed the location of the transmitter in the Pacific Ocean.

The FCC also granted a license to another licensee for a location in Stockton, California, 84 kilometers from Mount Allison. CCI constructed its station on Mount Allison -- not in the Pacific Ocean. CCI later discovered its error and requested the FCC to correct the error in the license. ComTech, which later obtained the second license, complained of interference. In several orders, the FCC refused CCI's request, and instructed CCI to submit its license for cancellation.

CCI appealed. The Court of Appeals set aside the FCC's orders as arbitrary and capricious in violation of the Administrative Procedure Act. It rejected two arguments that the FCC advanced on appeal.

First, the Appeals Court wrote that the "simple ipse dixit that CCI’s typographical error rendered its license void ab initio does not do it, especially in light of the Commission's practice of correcting, without much ado, typographical errors such as this one. The Commission's departure from this practice, with no explanation, renders its void ab initio rationale arbitrary and capricious."

The Court added that "the Commission's void ab initio rationale makes no sense. The license the Commission granted CCI specified Mount Allison as the transmitter site, a fact later confirmed by CCI itself when it notified the Commission that it had built its transmitter and was operating from Mount Allison. For the Commission seven years later to pronounce CCI's license void ab initio because the geographic coordinates provided specify a point in the Pacific Ocean is, politely speaking, unreasonable. The Commission must have known -- from CCI's license and CCI's notice -- that CCI was operating from a mountain, not the ocean; with minimal effort the Commission staff could have determined the precise location."

Second, the Appeals Court wrote that the FCC's "second rationale fares no better. It offers only a partial, and ultimately inadequate, explanation of the inevitable dismissal of CCI's application -- even had it contained the correct coordinates at the outset -- because CCI requested a transmitter site less than 120 kilometers from ComTech's site. The sites would have been deemed ``mutually exclusive,´´ the Commission says, because section 90.723 of the Commission rules provides that ``the separation of cochannel base stations shall be 120 kilometers.´´"

But, the Court noted that "This general requirement, however, is significantly qualified by the rule's second sentence, which states that a station separation of less than 120 kilometers ``will be considered on a case-by-case basis upon submission of a technical analysis indicating that at least 10 dB protection will be provided to an existing station's 38 dBu signal level contour.´´"

The FCC did not engage in the required case-by-case analysis. The Court added that the FCC "did not mention the provision or, more significantly, why it was unavailable to CCI."

This case is Communications and Control, Inc. v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. No. 03–1213, an appeal of final orders of the FCC.

EPIC Files FOIA Complaint Against DOD Seeking Records Regarding Data Mining Project

7/21. The Electronic Privacy Information Center (EPIC) filed a complaint [7 pages in PDF] in U.S. District Court (DC) against the Department of Defense (DOD) alleging violation of the Freedom of Information Act (FOIA) in connection with the EPIC's request for records of the DOD pertaining to the DOD's data mining project named "Verity K2 Enterprise".

Background. On May 27, 2004 the General Accounting Office (GAO) released a report [71 pages in PDF] titled "Data Mining: Federal Efforts Cover a Wide Range of Uses". This report covers 199 different data mining efforts at 52 different federal agencies.

In particular, this GAO report disclosed and briefly described the DOD's Verity K2 Enterprise project. It stated that it "Mines data from the intelligence community and Internet searches to identify foreign terrorists or U.S. citizens connected to foreign terrorism activities". The report also stated that the project uses both personal data, and private sector data. See, story titled "GAO Reports on Data Mining at Federal Agencies" in TLJ Daily E-Mail Alert No. 907, May 28, 2004.

On May 17, 2004, a DOD advisory committee named the Technology and Privacy Advisory Committee (TAPAC) released a report [140 pages in PDF] titled "Safeguarding Privacy in the Fight Against Terrorism" regarding data mining by the DOD and the rest of the federal government, the Defense Advanced Research Projects Agency's (DARPA) Total Information Awareness (TIA) program, and individual privacy. The report concluded that data mining is an important tool for fighting terrorism, and should be used, but with more concern for the protecting individual data privacy of U.S. persons. See, story titled "DOD Advisory Committee Backs Data Mining, with Attention to Privacy" in TLJ Daily E-Mail Alert No. 900, May 18, 2004.

The TAPAC was formed following various Congressional actions pertaining to the DARPA's TIA project. On February 7, 2003, the DOD announced in a release that it "will establish two boards to provide oversight of the Total Information Awareness Project ..."

On March 10, 2003, the DOD published a notice in the Federal Register stating that it established the TAPAC. The DOD stated that "The TAPAC will advise the Secretary of Defense concerning the legal and policy considerations implicated by the application of pattern queries/data correlation technology to counter-terrorism and counter-intelligence missions." See, story titled "DOD Establishes Technology and Privacy Advisory Committee" in TLJ Daily E-Mail Alert No. 620, March 11, 2003.

FOIA Dispute. The EPIC complaint states that on May 21, 2004, the EPIC submitted a FOIA request to the DOD requesting "all agency records (included but not limited to electronic records) concerning Defense Intelligence Agency (``DIA´´) use of a program or system known as ``Verity K2 Enterprise´´ for the purpose of analyzing intelligence and detecting terrorist activities." (Parentheses in original.)

The complaint also states that the EPIC requested expedited processing, and that the DOD has not produced responsive records, and has not responded to its request for expedited processing.

The complaint quotes extensively from the TAPAC's report, especially its recommendations regarding the protection of privacy.

The complaint alleges three causes of action under the FOIA, which is codified at 5 U.S.C. § 552 -- that the DOD has failed to timely respond to a request for expedited processing, that the DOD has failed to grant a request for expedited processing, and that the DOD has failed to complete its processing of the EPIC's request. The complaint requests that the Court order the DOD to immediately process the request for records, and produce records.

Washington Tech Calendar
New items are highlighted in red.
Monday, July 26

The House and Senate will not meet from July 26 through September 6.

The Democratic National Convention will be held in Boston, Massachusetts on July 26 through July 30.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding the reporting requirements for U.S. providers of international telecommunications services. This NPRM is FCC 04-70 in IB Docket No. 04-112. See, notice in the Federal Register, May 25, 2004, Vol. 69, No. 101, at Pages 29676 - 29681.

Tuesday, July 27

10:00 AM - 3:00 PM. The Department of Commerce's (DOC) Technology Administration and the U.S. Department of Education will host an event titled "Assistive Technology Exhibit and Policy Forum". See, notice. Location: DOC, 14th Street between Pennsylvania and Constitution Avenues, Main Lobby and Auditorium.

Wednesday, July 28

9:00 AM - 1:30 PM. The National Institute of Standards and Technology (NIST) and the National Telecommunications and Information Administration (NTIA) will hold a public meeting on Internet Protocol version 6 (IPv6). Location: Room 4830, Department of Commerce, 1401 Constitution Avenue, NW. See, NTIA notice July 20, 2004, and notice in the Federal Register, July 15, 2004, Vol. 69, No. 135, at Page 42422.

10:00 AM - 3:00 PM. The Federal Communications Commission's (FCC) Technological Advisory Council will meet. See, FCC notice [PDF] and notice in the Federal Register, July 6, 2004, Vol. 69, No. 128, at Pages 40638. Location: FCC, 445 12th St., SW., Room TW-C305.

2:00 - 4:00 PM. There will be a meeting of the WRC-07 Advisory Committee, Informal Working Group 3: IMT-2000 and 2.5 GHz Sharing Issues. See, FCC notice [PDF]. Location: FCC, 445 12th Street, SW, Room 7-B516 (South Conference Room 7th Floor), Washington DC.

Federal Communications Commission (FCC) Auction No. 56 is scheduled to begin. This pertains to licenses in the 24 GHz Service in the 24.25-24.45 GHz and 25.05-25.25 GHz bands. See, notice in the Federal Register, April 20, 2004, Vol. 69, No. 76, at Pages 21099 - 21110.

Deadline to submit nominations to the Department of Commerce for consideration for the 2005 Medal of Technology awards. See, notice.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding unlicensed use of the 3650-3700 MHz band. The FCC adopted this NPRM on April 15, 2004. This item is FCC 04-100 in ET Docket Nos. 04-151, 02-380 and 98-237. See, notice in the Federal Register, May 14, 2004, Vol. 69, No. 94, at Pages 26790 - 26803. See also, story titled "FCC Announces NPRM Regarding Unlicensed Use in the 3650-3700 MHz Band" in TLJ Daily E-Mail Alert No. 878, April 16, 2004.

Deadline to submit reply 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.

2:00 - 4:00 PM. The American Bankers Association (ABA) will host an event titled "Phishing: Keeping Your Customers From Getting Caught". The speakers will include Wayne Abernathy (Assistant Secretary for Financial Institutions at the Treasury Department), William Henley (Federal Deposit Insurance Corporation), Dan Larkin ( Chief of the FBI's Internet Crime Complaint Center's Cyber Division), and Mark Mendelsohn (Department of Justice, Computer Crime and Intellectual Property Section). The event will be webcast and telecast. See, notice and registration page. Location: 1120 Connecticut Avenue, NW.

Thursday, July 29

9:00 AM - 4:30 PM. The Federal Communications Commission's (FCC) Media Bureau will sponsor a symposium titled "A La Carte MVPD Pricing". Location: FCC, 445 12th Street, SW, Room TW-C305 (Commission Meeting Room).

9:00 AM - 4:30 PM. The National Institute of Standards and Technology's (NIST) Judges Panel of the Malcolm Baldrige National Quality Award will hold a partially closed meeting. See, notice in the Federal Register, June 28, 2004, Vol. 69, No. 123, at Pages 36063 - 36064. Location: 222, Red Training Room, Gaithersburg, MD.

Extended deadline to submit comments to the Federal Communications Commission (FCC) regarding its proceeding titled "In the Matter of Review of the Commission's Broadcast and Cable Equal Employment Opportunity Rules and Policies". This is MM Docket No. 98-204. See, notice of extension [PDF].

Friday, July 30

9:30 AM - 1:00 PM. The Federal Communications Commission's (FCC) Internet Policy Working Group (IPWG) will host an event that it describes as "a roundtable discussion to address international issues associated with the migration of communications services and applications to IP-based technologies". See, FCC notice [PDF]. Location: FCC, 445 12th Street, SW, Commission Meeting Room.

Extended deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Public Notice (DA 04-1454) regarding a la carte and themed programming and pricing options for programming distribution on cable TV and direct broadcast satellite systems. This is MB Docket No. 04-207. See, notice of extension [PDF].

Monday, August 2

Deadline to submit applications to the Department of Commerce's (DOC) Technology Administration (TA) to join the TA's business development mission to Northern Ireland and the Republic of Ireland. This delegation will include U.S. based senior executives representing the information and communications technology sector. See, notice in the Federal Register, May 26, 2004, Vol. 69, No. 102, at Pages 29928 - 29930.

6th Circuit Addresses Statute of Limitations and Award of Attorneys Fees in Music Copyright Case

7/22. The U.S. Court of Appeals (6thCir) issued its opinion in Bridgeport Music v. Rhyme Syndicate Music, a copyright case involving music sampling, the incorporation of short segments of one musical recordings into another recording. Although, the issues on appeal in this case involve the application of the three year statute of limitations for copyright infringement claims pursuant to 17 U.S.C. § 507(b), service of process, and the award of attorneys fees to the prevailing party pursuant to 17 U.S.C. § 505.

The Appeals Court affirmed the District Court's summary judgment for one defendant on the basis that the plaintiff had actual knowledge of its infringement claims more than three years before it filed its complaint. The Appeals Court also affirmed the District Court's the dismissal of the complaint as to two other defendants for lack of proper service.

The Appeals Court vacated and remanded (in a divided portion of the opinion) the District Court's award of attorneys fees to the defendant that prevailed on the statute of limitations claim. The Appeals Court held that its was the prevailing party within the meaning of Section 505, but "attorney fees are not to be awarded automatically to every prevailing party". The Appeals Court held that the plaintiff had advanced an objectively reasonable claim, and that, on remand, the District Court should should consider the factors articulated by the Supreme Court in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994).

This case is Bridgeport Music, Inc., et al. v. Rhyme Syndicate Music, et al., U.S. Court of Appeals for the 6th Circuit, App. Ct. Nos. 03-5005 and 03-5744, an appeal from the U.S. District Court for the Middle District of Tennessee, at Nashville, D.C. No. 01-00706, Judge Thomas Higgins presiding.

More News

7/22. The Senate Judiciary Committee held an executive business meeting, the agenda of which included consideration of S 1635, the "L-1 Visa (Intracompany Transferee) Reform Act of 2003", and HR 1417, the "Copyright Royalty and Distribution Reform Act of 2004". However, the Committee did not consider either of these items.

7/22. The House Ways and Means Committee's Subcommittee on Health held a hearing titled "Electronic Prescribing". See, prepared testimony of Craig Fuller (National Association of Chain Drug Stores), Thomas Sullivan (Women’s Health Center Cardiology), and Jonathan Teich (Harvard University). Also, the House Commerce Committee's Subcommittee on Health held a hearing titled "Health Information Technology: Improving Quality and Value of Patient Care".

7/23. The Department of Commerce's (DOC) Bureau of Industry and Security (BIS/BXA) published a notice in the Federal Register stating that it is recruiting private sector members for its six Technical Advisory Committees (TACs). The Information Systems TAC provides advice to the DOC on Control List Categories 3 (electronics), 4 (computers), and 5 (telecommunications and information security). Members of TACs serve for four years. See, Federal Register, July 23, 2004, Vol. 69, No. 141, at Pages 43970 - 43971.

7/22. The U.S. District Court (DMd) issued a memorandum opinion [27 pages in PDF] in the multidistrict litigation titled "In re Wireless Telephone Radio Frequency Emissions Products Liability Litigation". This opinion remands several actions to the Superior Court for the District of Columbia.

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