7/17. The Wall Street Journal published a piece by Sen. Charles Schumer (D-NY) titled "Memo to DOJ: Drop the Apple E-Books Suit" in which he urged the Department of Justice (DOJ) not to proceed with the civil antitrust action that it filed in April against Apple and five large book publishers.

Sen. Schumer is a senior member of the Senate Judiciary Committee (SJC), which oversees the DOJ. Sen. Schumer also represents the state of New York, which includes New York City (NYC). Apple is not based in New York, but several of the publisher defendants, including Simon & Shuster, Macmillan and Penguin, are based in NYC. Also, many leading book authors reside in New York.

On April 11, 2012, the DOJ's Antitrust Division filed a complaint [36 pages in PDF] in the U.S. District Court (SDNY) against Apple and five book publishers alleging violation of Section 1 of the Sherman Act in connection their alleged conspiring to increase the prices that consumers pay for e-books.

Sen. Schumer wrote that "The suit will restore Amazon to the dominant position atop the e-books market it occupied for years before competition arrived in the form of Apple. If that happens, consumers will be forced to accept whatever prices Amazon sets."

However, Sen. Schumer wrote that Amazon "can set rock-bottom prices", and "Because of its large product catalog, Amazon could afford to sell e-books below cost".

Amazon's business practices "put publishers and authors at a distinct disadvantage", wrote Sen. Schumer. "These losses will be particularly felt in New York, which is home not only to many publishers, but also to a burgeoning digital innovation industry."

Sen. Schumer's piece argues in the interests of publishers and authors. In contrast, the interpretation of the Sherman Act usually applied by the Antitrust Division and the federal courts is that the purpose of the statute is to protect consumer welfare, and particularly their interest in lower prices. The consumers in this case are people who buy and read e-books.

The Antitrust Division's complaint alleges that "Apple and Publisher Defendants reached an agreement whereby retail price competition would cease (which all the conspirators desired), retail e-book prices would increase significantly (which the Publisher Defendants desired), and Apple would be guaranteed a 30 percent ``commission´´ on each e-book it sold (which Apple desired)." (Parentheses in original.)

For more on the federal action, see stories in TLJ Daily E-Mail Alert No. 2,368, April 11, 2012.

 • DOJ Sues Apple and Book Publishers Alleging E-Book Price Collusion
 • Analysis of DOJ's Sherman Act Claim Against Apple and E-Book Publishers
 • Outside Reaction to DOJ E-Books Antitrust Action
 • States Sues Apple and E-Book Publishers
 • Commentary: Forum Selection in Antitrust Cases

See also, stories in TLJ Daily E-Mail Alert No. 2,371, April 14, 2012.

 • Scott Turow Criticizes DOJ E-Books Action
 • Google's Larry Page Is Excited About Tablets
 • NAF Writer Condemns Amazon and DOJ E-Books Antitrust Action

This case is U.S.A. v. Apple, Inc., et al., U.S. District Court for the Southern District of New York, D.C. No. 1:12-cv-02826-UA.

7/18. Wikileaks released a statement regarding its fundraising efforts and financial status. It disclosed that its "cash reserves ... have diminished from EUR 800,000 at the end of December 2010, to less than EUR 100,000 at the end of June 2012".

Wikileaks states in its web site that it receives documents primarily via "anonymous electronic drop box", and then publishes certain documents online, in order to bring "important news and information to the public". It describes itself as a "not-for-profit media organisation". It has been funded by donations, and primarily via online financial transactions.

Wikileaks was founded by Julian Assange in 2006. However, its fundraising problems began in late 2010 just after it published classified U.S. Department of State (DOS) cables in its web site.

The Department of Justice (DOJ) has not charged Wikileaks or any of its employees with any crimes arising out of the publication of classified government documents. Although, the DOJ has charged persons with violation of 18 U.S.C. § 1030, and conspiracy, in connection with retaliatory distributed denial of service (DDOS) attacks directed at PayPal servers. See, story titled "Grand Jury Indicts 14 for WikiLeaks Related DDOS Attacks" in TLJ Daily E-Mail Alert No. 2,264, July 20, 2011.

The U.S. government has been successful in persuading financial service providers to limit WikiLeaks ability to receive donations. Numerous companies terminated their relationships with Wikileaks, beginning shortly after publication of the classified DOS cables. For example, PayPal suspended WikiLeaks' accounts, citing violations of the PayPal terms of service. MasterCard and Visa also stopped processing payments to WikiLeaks.

WikiLeaks complained in its July 18 release about the "unlawful banking blockade by US financial giants VISA and MasterCard". It added that "For the year 2011, the blockade resulted in WikiLeaks' income falling to just 21% of its operating costs."

The release also identifies methods for making donations via financial service providers in France and Iceland, and solicits donations, "immediately before VISA/MasterCard attempts to shut it down".

Assange is currently in the United Kingdom. He is fighting efforts by Sweden to extradite him pursuant to a warrant issued in connection an investigation of sexual assault allegations against him.

He railed in the July 18 release: "We beat them in Iceland and, by God, we'll beat them in France as well. Let them shut it down. Let them demonstrate to the world once again their corrupt pandering to Washington. We're waiting. Our lawyers are waiting. The whole world is waiting. Do it."

7/17. The House Judiciary Committee (HJC) announced that it will hold a hearing on Tuesday, July 24 on HR 3179 [LOC | WW], a bill to authorize states to collect taxes on out of state remote sellers, including internet sales. See, notice.

This bill has a title that does not describe its content, "Marketplace Equity Act of 2011".

Sponsorship of HR 3179 is bipartisan. The sponsor is Rep. Steve Womack (R-AR). The lead cosponsor is Rep. Jackie Speier (D-CA). There are now 48 cosponsors. It was introduced on October 13, 2011.

Several cosponsors are members of the HJC, including Rep. Ted Poe (R-TX), Rep. Dennis Ross (R-FL), Rep. Tim Griffin (R-AR), Rep. Bobby Scott (D-VA), Rep. Hank Johnson (R-GA), Rep. Judy Chu (D-CA), Rep. Maxine Waters (D-CA), Rep. Linda Sanchez (D-CA), Rep. Steve Cohen (D-TN), and Rep. Mike Quigley (D-IL).

However, opposition is also bipartisan. Since internet related tax issues first arose in the 1990s, members of the House and Senate have not divided along partisan lines.

There are also resolutions pending in the House and Senate against granting state taxing authorities the power to impose taxes on distant internet sellers. The lead sponsors of the House resolution are members of the HJC. See, related story in this issue titled "The Anti Internet Sales Tax Resolutions".

The Supreme Court ruled in its 1992 opinion in Quill v. North Dakota, 504 U.S. 298, that state and local taxing authorities are barred under the Commerce Clause from requiring remote sellers without a substantial nexus to the taxing jurisdiction to collect sales taxes for sales to persons within the jurisdiction.

However, the Supreme Court added that Congress may extend such authority. It wrote that "Congress is now free to decide whether, when, and to what extent the States may burden interstate mail order concerns with a duty to collect use taxes." (At 504 U.S. 318.)

HR 3179 would extend to the states such authority.

It provides that "a State electing, individually or through an agreement with one or more of the several States, ... is authorized to require all sellers not qualifying for the small seller exception to collect and remit sales and use taxes with respect to remote sales into the State without regard to the location of the seller".

The bill's "small seller exception" applies "for remote sellers with gross annual receipts in the preceding calendar year from remote sales of items, services, and other products in the United States not exceeding $1,000,000 (or such greater amount as determined by the State involved) or in the State not exceeding $100,000 (or such greater amount as determined by the State)." (Parentheses in original.)

Numerous state and local tax collectors have long sought such authority from Congress. Bills have long been introduced in the House and Senate. However, none have been enacted. These state and local governments have found allies in some groups representing brick and mortar retailers, who seek to impose burdens on their online competitors.

Some groups that represent online retailers, and other remote retailers, as well as some technology groups, have opposed these bills.

There is a different but related bill pending in the Senate, S 1452 [LOC | WW], nondescriptively titled the "Main Street Fairness Act". Its sponsor is Sen. Dick Durbin (D-IL). The House version of that bill, HR 2710 [LOC | WW], also titled "Main Street Fairness Act", is sponsored by Rep. John Conyers (D-MI). See, story titled "Durbin and Conyers Introduce Bills to Permit States to Tax Out of State Internet Retailers" in TLJ Daily E-Mail Alert No. 2,275, July 31, 2011.

During full Senate consideration of S 2327 [LOC | WW], the "Small Business Jobs and Tax Relief Act", a tax bill, on July 11 and 12, Sen. Durbin and others sought to have S 2327 amended with the text of S 1452. However, the amendment was not considered, and the Senate did not pass S 2327.

The Computer and Communications Industry Association's (CCIA) Ed Black stated in a release on July 11 that "Such a burden for small online businesses certainly does not belong in a bill called the Small Business Jobs and Tax Relief Act. It has never been and should not be the job of small businesses to collect taxes for state and local governments outside where they live and do business. This is not relief and not fairness -- it is government expanding tax collection in ways that would require online businesses to suddenly learn tax laws for hundreds of state and local jurisdictions outside where they operate. This proposal, and other online sales tax collection proposals like it, would allow states to penalize the innovative e-commerce business model by targeting small online businesses as convenient sources (and collectors) of revenue.”

The Retail Industry Leaders Association (RILA) represents brick and mortar retailers. Its members include Target, Walmart, JCPenny, Sears, BestBuy, and other large companies. It supports giving the states power to tax distant internet sellers. See, July 11, 2012, release.

The Electronic Retailing Association (ERA) opposes granting states internet taxing authority. See, piece by Julie Coons, head of the ERA.

The Direct Marketing Association (DMA) has also long opposed Congressional legislation that would authorize states to collect sales and use taxes from remote sellers.

NetChoice (Steve DelBianco's group) released a short piece on July 18 titled "For online sales taxes, just follow the money".

eBay supports Congressional resolutions that oppose giving the states internet sales tax authority. See, statement.

The House will not meet. It will next meet on Monday, July 23.

The Senate will not meet. It will next meet on Monday, July 23.

POSTPONED. 9:00 AM. The House Commerce Committee's (HCC) Subcommittee on Commerce, Manufacturing, and Trade will hold a hearing titled "Where the Jobs Are: Moving the Economy with Mobile Apps". The witnesses will be Stephanie Hay (500 Startups), John Horrigan (TechNet), Morgan Reed (Association for Competitive Technology), and Scott Stanfield (Vertigo Software, Inc.). See, notice. Location: Room 2322, Rayburn Building.

POSTPONED TO JULY 25. 9:30 AM. The House Ways and Means Committee's (HWMC) Subcommittee on Human Resources will hold a hearing titled "Use of Technology to Improve the Administration of SSI’s Financial Eligibility Requirements". See, notice. Location: Room 1100, Longworth Building.

TIME?. The House Commerce Committee's (HCC) Subcommittee on Commerce, Manufacturing, and Trade will meet to mark up HR 6131 [LOC | WW], a bill to extend the "Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers Beyond Borders Act of 2006" or "SAFE WEB Act". This meeting will begin following the completion of the 9:00 AM hearing of this Subcommittee. See, notice. Location: Room 2322, Rayburn Building.

The House will meet at 2:00 PM.

The Senate will meet at 2:00 PM.

9:30 AM - 12:45 PM. The DC Bar Association will host a presentation titled "Cybersleuth’s Guide to Effective Internet Research Strategies for Lawyers: Google, Cloud Apps and Other Tips". The speakers will be Carole Levitt and Mark Rosch (both of Internet For Lawyers). The price to attend ranges from $89 to $129. Reporters are barred from attending most DC Bar events. CLE credits. See, notice. For more information, call 202-626-3488. Location: DC Bar Conference Center, 1101 K St., NW.

1:30 - 4:45 PM. The DC Bar Association will host a presentation titled "Cybersleuth’s Guide to Effective Internet Research Strategies for Lawyers: Investigative Research". The speakers will be Carole Levitt and Mark Rosch (both of Internet For Lawyers). The price to attend ranges from $89 to $129. Reporters are barred from attending most DC Bar events. CLE credits. See, notice. For more information, call 202-626-3488. Location: DC Bar Conference Center, 1101 K St., NW.

Day one of a two day event hosted by the American Intellectual Property Law Association (AIPLA) titled "AIPLA 16th Annual Patent Cooperation Treaty Seminar". For more information, contact aipla at aipla dot org or call 703-415-0780. Location: Alexandria, VA.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) [22 pages in PDF] regarding creating a Do-Not-Call registry for public safety answering points (PSAPs). The FCC adopted this item on May 21, 2012, and released the text on May 22. It is FCC 12-56 in CG Docket No. 12-129. See, notice in the Federal Register, Vol. 77, No. 120, Thursday, June 21, 2012, Pages 37362-37367.

Day two of a two day event hosted by the American Intellectual Property Law Association (AIPLA) titled "AIPLA 16th Annual Patent Cooperation Treaty Seminar". For more information, contact aipla at aipla dot org or call 703-415-0780. Location: Alexandria, VA.

10:00 AM. The House Judiciary Committee (HJC) will hold a hearing on HR 3179 [LOC | WW], a bill to authorize states to collect taxes on out of state remote sellers, including internet sales. The HJC will webcast this hearing. This bill has a title that does not describe its content, "Marketplace Equity Act of 2011". See, notice. Location: Room 2141, Rayburn Building.

1:00 - 2:30 PM. The Information Technology and Innovation Foundation (ITIF) will host a panel discussion on the use of information technology for voting and voting registration. It is titled "Making Voting Accessible for Disabled Veterans". The speakers will include Sen. Johnny Isakson (R-GA), Daniel Castro (ITIF), Brad Fain (Expeditionary Medical Facility Human Systems Integration), and Carol Paquette (Operation BRAVO Foundation). See, notice. Location: Room 188, Russell Building.

2:30 PM. The Senate Commerce Committee (SCC) will hold a hearing titled "Cable Act at 20". The witnesses will be Melinda Witmer (Time Warner Cable), Colleen Abdoulah (WOW Internet, Cable, and Phone), Martin Franks (CBS Corporation), Gordon Smith (National Association of Broadcasters), Mark Cooper (Consumer Federation of America), Preston Padden (University of Colorado School of Law). See, notice. Location: Room 253, Russell Building.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed meeting to mark up undisclosed legislation. See, notice. Location: Room 219, Hart Building.

Deadline for carriers to file with the Federal Communications Commission's (FCC) Wireline Competition Bureau (WCB), with respect to the Connect America Fund Phase I (CAF Phase I), notices stating the amount of support each wishes to accept, and the areas by wire center and census block in which the carrier intends to deploy broadband, or stating that the carrier declines incremental support for 2012. See, notice in the Federal Register, Vol. 77, No. 105, Thursday, May 31, 2012, at Pages 32113-32114.

9:30 - 11:00 AM. The New America Foundation (NAF) will host a panel discussion titled "Transatlantic Perspectives on Digital Rights and Online Privacy". See, notice. Location: NAF, Suite 400, 1899 L St., NW.

12:30 PM. The House Judiciary Committee's (HJC) Subcommittee on Intellectual Property, Competition and the Internet will hold a hearing titled "Cloud Computing: An Overview of the Technology and the Issues facing American Innovators". See, notice. Location: Room 2141, Rayburn Building.

RESCHEDULED FROM JULY 20. 2:00 PM. The House Ways and Means Committee's (HWMC) Subcommittee on Human Resources will hold a hearing titled "Use of Technology to Improve the Administration of SSI’s Financial Eligibility Requirements". See, notice. Location: Room 1100, Longworth Building.

10:00 AM. The Senate Judiciary Committee (SJC) will hold an executive business meeting. See, SJC notice. Location: Room 226, Dirksen Building.

1:00 PM. The Senate Judiciary Committee (SJC) will hold a hearing on the nomination of William Baer (Arnold & Porter) to be Assistant Attorney General (AAG) in charge of the Department of Justice's (DOJ) Antitrust Division. See, SJC notice. Location: Room 226, Dirksen Building.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed hearing on undisclosed matters. See, notice. Location: Room 219, Hart Building.

The House will not meet.

7/17. On February 16, 2011, Rep. Dan Lungren (R-CA) and others introduced HRes 95 a resolution against granting state and local taxing authorities the power to impose taxes on distant internet sellers.

Sen. Ron Wyden (D-OR), Sen. Kelly Ayotte (R-NH), and others introduced the substantially identical resolution in the Senate, SRes 309, on November 2, 2011.

There are now 31 cosponsors of HRes 95. Rep. Lungren is a senior member of the House Judiciary Committee (HJC). Other cosponsors who are members of the HJC include Rep. Zoe Lofgren (D-CA), Rep. Jim Sensenbrenner (R-WI), Rep. Howard Coble (R-NC), Rep. Steve Chabot (R-OH), Rep. Tom Marino (R-PA).

These resolutions states that "it is the sense of the House of Representatives that Congress should not enact any legislation that would grant State governments the authority to impose any new burdensome or unfair tax collecting requirements on small online businesses and entrepreneurs, which would ultimately hurt the economy and consumers in the United States."

They recite in the findings that "the open online marketplace has enabled a large number of small retailers and entrepreneurs across the Nation to establish and strengthen their businesses on various e-commerce platforms and therefore protect and create jobs, increase consumer choice, create competition in the retail industry, and provide quality goods and services at reasonable and often discounted prices".

These resolutions also find that "any Federal legislation that would upset this open and fair environment and allow State governments to impose new onerous and burdensome sales tax collecting schemes on Internet-enabled small businesses that do not even reside in their State would adversely impact hundreds of thousands of jobs, reduce consumer choice, and impede the growth and development of interstate commerce".

Rep. Lungren issued a release in 2011 that states that ">Hundreds of thousands of small business owners use the internet to advertise and sell their products and services. These men and women create most of the new jobs in this country, yet they are constantly being challenged by both the states and the federal government with new regulations, new mandates and new taxes. Our Resolution will send the message that Congress understands the challenges of growing a business in today’s economic climate and will protect small business owners from unfair and burdensome new taxes.

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