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News Briefs from April 1-5, 2001

4/5. Sen. Charles Schumer (D-NY) introduced S 705, a bill to establish a health information technology grant program for hospitals, skilled nursing facilities, and home health agencies. It was referred to the Senate Finance Committee.
4/5. Sen. Olympia Snowe (R-ME) and Sen. John Kerry (D-MA) introduced S 714, a bill to urge the USTR to pursue the establishment of a small business advocate within the WTO. It was referred to the Senate Finance Committee.
4/5. Sen. Bill Frist (R-TN) introduced S 722, a bill to amend the Communications Act of 1934 to prohibit telemarketers from interfering with the caller identification service of any person to whom a telephone solicitation is made. It was referred to the Senate Commerce Committee. The House Commerce Committee approved a related but not identical bill, HR 90, on February 28.
4/5. Sen. Conrad Burns (R-MT) and Sen. Larry Craig (R-ID) sent a letter to the acting heads of the U.S. Forest Service and Bureau of Land Management regarding proposed rules changes regarding right of way fees and their calculation as provided for under the Federal Lands Policy and Management Act (FLPMA). The proposed changes include a proposal to levy fees on fiber optic cable based on the number of individual strands of fiber in the cable, as opposed to the cable itself. Sen. Burns stated that "This has the potential to slow or shut down the laying of fiber optics, and serves to hinder the technology growth in rural areas like Montana and Idaho."
4/5. The Senate Finance Committee held a hearing titled "Taxpayer Beware: Schemes, Scams and Cons" that examined tax avoidance scams that are promoted via the Internet. Committee Chairman Charles Grassley (R-IA) said in his opening statement [PDF] that "Tax scams are as old as the tax code. The Internet is giving them a thriving new life. The number of participants in these tax scams is growing like a weed. The Internet is greatly helping that growth. The Internet gives these tax con artists the unprecedented ability to reach out to millions of households cheaply and easily." See also, prepared statements of witnesses in PDF: Aaron Bazar (former seller of tax scams), JJ MacNab (American Bar Association), Robert Sommers (attorney), Jay Adkisson (financial adviser), Joseph Hodges (ABA), Hugh Stevenson (FTC, Bureau of Consumer Protection), and Michael Brostek (GAO).
4/5. The House Commerce Committee's Subcommittee on Oversight and Investigations held a hearing titled "Protecting America's Critical Infrastructures: How Secure are Government Computer Systems?" Full committee Chairman Billy Tauzin (R-LA) said in his opening statement that "I don't think that many people realize the extent to which our Federal civilian agencies collect and store such sensitive information -- whether it is medical, financial or otherwise personal information of American citizens, confidential or proprietary data from America's corporations, cutting-edge scientific research or export-controlled information, or even sensitive law enforcement data." See also, prepared statements of witnesses:
 • Robert Dacey (General Accounting Office), who stated that "federal computer systems are riddled with weaknesses that continue to put critical operations and assets at risk."
 • Glenn Podonsky (U.S. Department of Energy), who provided demonstration of cyber security penetration capabilities.
 • Ron Dick (FBI's National Infrastructure Protection Center), who stated that "Currently we have 102 cases (of a current total of 1,219 pending cases) involving computer intrusions into government systems. This includes intrusions into federal, state and local systems, as well as the military. It should be noted that a single case can consist of hundreds of compromised systems that have experienced thousands of intrusions."
 • Sallie McDonald (GSA), who stated "that over 100 countries have or are developing information warfare capabilities that could be used to target critical components of the national infrastructure including government systems."
 • John Tritak (Department of Commerce).
 • Tom Noonan (Internet Security Systems, Inc).
4/5. President Bush gave an speech to the American Society of Newspaper Editors. He addressed trade with the PRC in response to a question. He said: "I believe that China ought to be a trading partner of ours. I think it's in our economic interests to open up the Chinese markets to U.S. products, to U.S. agricultural products. I not only believe it's in our economic interest, I believe it's in our interest to promote U.S. values. And I believe the marketplace promotes values. When people get a taste of freedom in the marketplace, they tend to demand other freedoms in their societies. And so, I'm an advocate of China's entering into the WTO and I'm hopeful that the current situation ends quickly and our people come home. China is a strategic partner, a strategic competitor. But that doesn't mean we can't find areas in which we can partner. And the economy's a place where we can partner. And we've got some differences with China, long-term differences, spreading of weapons of mass destruction is an issue that we need to work with the Chinese on, as well as other nations in that part of the world. Human rights is an issue, but I believe trade will encourage more freedom, particularly when it comes to individual liberties. The marketplace is -- the marketplace unleashes the opportunity for people to make choices, and so I continue to push for trade with China, and -- " See, transcript.
4/5. Congressional Democratic leaders and the Progressive Policy Institute released a document titled Democrats' High Tech Agenda [PDF]. The agenda includes 10 points:
1. Make broadband Internet available to every American by the end of the decade.
2. Help all regions take full advantage of information technology to prosper.
3. Keep costs of access to information technology low and within everyone’s reach.
4. Increase federal support for basic research and development.
5. Support science and technology programs and strong intellectual property protection.
6. Improve math and science education for our children and ensure their computer literacy by the sixth grade.
7. Encourage companies to invest more in training and recruitment, and help workers develop the information technology skills they need.
8. Foster E-business with secure networks and workable solutions to protect personal privacy.
9. Smooth the transition to the Information Age by updating policies on exports, trade, Internet taxation, immigration and small business.
10. Foster E-government to improve efficiency and speed public interactions with government.
See also, statement by House Minority Leader Richard Gephardt (D-MO).
4/5. Rep. Jerry Weller (R-IL) and Rep. Richard Neal (D-MA) introduced HR 1411 IH, the Expensing Technology Reform Act of 2001. The bill would reform the Internal Revenue Code by updating the existing depreciation schedules for high tech assets. Rep. Weller explained the bill in a statement in the Congressional Record. "Currently, businesses must depreciate much of their high tech equipment over a 5 year period. This bill would allow businesses to expense these assets. The 5 year depreciation lifetime for tax purposes is outdated since many companies today must update their computers as quickly as every 14 months in order to stay technologically current. We allow businesses to expense their computers, peripheral equipment, servers, networks, wireless telecommunications equipment, software, high tech medical equipment and copiers in this bill."
4/5. The Universal Service Forum of the Consumer Energy Council of America (CECA) wrote a report on universal service funding, an ancient system of federally mandated subsidies and cross-subsidies in the telecommunications industry, that is now codified in Section 254 of the Communications Act. The report addresses extending the reach of the program to include Internet services. The CECA published an executive summary of the report, but not the report itself, in its web site.
4/5. The USITC held a Section 337 evidentiary hearing regarding the importation of semiconductor chips with minimized chip package size. See, notice of investigation. (Inv. No. 337-TA-432.)
4/5. The USTR's published a notice in the Federal Register stating that its Trade Policy Staff Committee is soliciting public comments on U.S. objectives and preparations for the upcoming meeting of the WTO Ministerial Conference in Doha, Qatar, on November 9-13, 2001. Comments are due by May 10, 2001. See, Federal Register, April 5, 2001, Vol. 66, No. 66,  at Pages 18142 - 18143.
4/5. Verizon named Michael Boland to be its SVP for Federal Government Relations. Boland was previously CEO of Boland & Madigan; before that was chief counsel and floor assistant to Sen. Trent Lott (R-MS); and, before that was counsel to the House Commerce Committee. See, Verizon release.4/5. Douglas Davison joined the Washington DC office of the law firm of Wilmer Cutler & Pickering as Of Counsel. He previously was Counsel to former SEC Chairman Arthur Levitt. See, WCP release [PDF]. See also, SEC release of Aug. 4, 2000.
4/5. The Senate Judiciary Committee held a hearing on the nominations of Larry Thompson to be Deputy Attorney General and Theodore Olson to be Solicitor General.
4/4. Many Members of Congress commented on the effect of the PRC hostage crisis on trade relations. Rep. Spencer Bachus (R-AL) stated that "Although Congress voted to provide China with permanent normal trade relations last year, the law also requires Congress to grant a temporary extension of normal trade relations if China does not become a member of the WTO by June 3. The Chinese are not likely to meet that deadline so the President will have to recommend a temporary extension of normal trade relations status for one more year. ... If the current situation continues much longer, I don't see how Members of Congress could possibly vote to give China an extension of trade privileges. We need to send a clear message to the Chinese government." See, release. Rep. Heather Wilson (R-NM) said "I have supported free trade with China and engagement with China's people. That and more is at risk, and not all of it is under the control of the President and his administration. In the coming months this House may consider China's access to the WTO, arms sales to Taiwan, military to military, cultural and scientific exchanges, as well as an array of other issues important to China." Rep. Joe Pitts (R-PA) said "This reckless aggression, the forced landing of our disabled plane, and now the holding of our crew and plane as hostages, and now China's belligerence is outrageous. It violates international agreements that China has signed; it damages U.S.-China relations." Rep. Dave Weldon (D-FL) said "I would encourage every American who is going to go shopping over the next few days to look at the labels on the products they are going to purchase and see if it is made in the U.S.A."
4/4. Sen. Sam Brownback (R-KS) introduced S 696, the Third Generation Wireless Internet Act, a bill to prohibit the FCC from applying spectrum aggregation limits to spectrum auctioned after December 31, 2000. The bill was referred to the Senate Commerce Committee. Sen. Brownback stated that the "wireless industry is fast approaching a crossroads where it will transition from voice and text messaging services to a marriage of wireless mobility with the power of the Internet and broadband Internet access: the ability to deliver voice, video, and data simultaneously over one wireless device. This transition will be made possible by the deployment of third generation technology, commonly referred to as "3G," which combines wireless mobility with transmission speeds and capacity resembling that of the broadband pipes being laid primarily in urban markets by wireline companies." See, Brownback statement.
4/4. Rep. Jerry Weller (R-IL) introduced HR 1411, a bill to amend the Internal Revenue Code of 1986 to allow qualified technological equipment and computer software to be expensed, and to reduce the depreciation period for business computers from the current five years to one. It was referred to the House Way and Means Committee, of which Rep. Weller is a member.
4/4. Rep. Phil English (R-PA) introduced HR 1446, the Standard Trade Negotiating Authority Act of 2001, a bill to provide trade negotiating authority, but not fast track authority. The bill was referred to the Ways and Means Committee and the Rules Committee. Rep. English issued a release which states that "The bill mandates extensive cooperation between the president and Congress in negotiating trade bills. The plan also exempts negotiations under the World Trade Organization from the preauthorization process."
4/4. Rep. Sander Levin (D-MI) introduced HR 1484, a bill to implement the a U.S. Jordan Free Trade Agreement [19 pages in PDF]. The agreement, which may serve as a model for future agreements, covers, among other things, intellectual property rights and electronic commerce, and well as labor and environmental issues. The bill was referred to the Ways and Means Committee and the Judiciary Committee.
4/4. Rep. Ernest Istook (R-OK) introduced HR 1410 a bill which the Congressional Record described as "a bill to foster innovation and technological advancement in the development of the Internet and electronic commerce, and to assist the States in simplifying their sales and use taxes". It was referred to the House Judiciary Committee.
4/4. Rep. John LaFalce (R-NY) introduced HR 1416, a bill to provide grants and other incentives to promote new communications technologies. It was referred to the House Commerce Committee.
4/4. The House Commerce Committee issued its report on HR 718, the Unsolicited Commercial Electronic Mail Act of 2001, sponsored by Rep. Heather Wilson (R-NM) and Rep. Gene Green (D-TX). (See, Rept. 107-41 Pt. 1).
4/4. The U.S. District Court (SDFl) entered judgment against Sean Healey enjoining him from further violations of § 17(a) of the Securities Act of 1933 and § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Court further ordered disgorgement and a civil penalty. The SEC alleged that Healey and other defendants used wash sales to create the appearance of active stock trading in the stock of New Directions Manufacturing, Inc., a company quoted on the NASD's OTC Bulletin Board system. Healey and another defendant then arranged to have a false and misleading research report published on a stock-picker web site, on their own web site, and through unsolicited mass e-mails. See, SEC release.
4/4. The House passed HR 8, a bill to phase out the estate and gift tax over a 10 year period by a vote of 274 to 154, and then recessed until April 24, for the traditional Easter break. The Senate will recess later this week when it completes its consideration of President Bush's budget.
4/4. The House Commerce Committee's Telecom Subcommittee held a hearing titled the E-Rate and Filtering: A Review of the Children's Internet Protection Act. Last year, the Congress passed, and President Clinton signed, legislation containing the CIPA. The statute requires schools and libraries receiving e-rate subsidies to use filtering technologies on computers with Internet access that are used by children. The ACLU and American Library Association have filed lawsuits challenging the constitutionality of the CIPA as applied to libraries.
Hearings on legislation are usually held before legislation is enacted. Nevertheless, this hearing gave proponents and opponents of the CIPA another opportunity to state their views. Rep. Chip Pickering (R-MS) and Rep. Steve Largent (R-OK) argued that the statute is necessary to protect children, and that it is constitutional. On the other hand, Rep. Jane Harmon (D-CA) said that "I am not sure that these tools should be mandated by the government." Rep. Roy Blount (R-MO) said that "there are good arguments on both sides."
Marvin Johnson of the ACLU verbally sparred with Reps. Pickering and Largent. He testified that the statute is unconstitutional, that filtering does not work, and that pormography does not harm children. One librarian (Laura Morgan of the Chicago Public Library) testified in support of the bill, and argued that men who view pormography at the public libraries create a hostile environment for the women who work in or use the libraries. Another librarian (Carolyn Caywood of Virginia Beach's library system) testified that local libraries, not the federal government, should set Internet access policies. Two representatives of companies that provide filtering software testified that filtering does work, as did Bruce Taylor, of the National Law Center for Families and Children.
4/4. The Senate Finance Committee held a hearing titled International Trade and the American Economy. The witnesses were Alan Greenspan and Mickey Kantor. Greenspan said in his prepared testimony that "there is also no doubt that this transition to the new high-tech economy, of which rising trade is a part, is proving difficult for a large segment of our workforce ... . This is most evident in the rising fear of job skill obsolescence that has induced a marked increase in experienced workers going back to school -- often community colleges -- to upgrade their skills for a rapidly changing work environment. While major advances in standards of living are evident among virtually all nations that have opened their borders to increased competition, the adjustment trauma resulting from technological advances as well as globalization has also distressed those who once thrived in industries that were once at the cutting edge of technology but that have become increasingly noncompetitive." He added, "Yet the protectionist propensity to thwart the process of the competitive flow of capital, from failing technologies to the more productive, is unwise and surely self-defeating." See also, prepared statement [PDF] of Chairman Charles Grassley (R-IA).
4/4. Rep. Duncan Hunter (R-CA) introduced a bill to revoke normal trade relations status for the People's Republic of China. He stated that "A favored trading partner with our country would follow proper protocol and not continue to hold our service men and women, along with our equipment, after being asked for their return. The fact is, while we trade with China, they prepare for war. The Communist regime is producing long-range ballistic missiles, which are targeted at U.S. military bases and American cities. They have engaged in espionage activities in which U.S. military secrets were stolen and they have developed weapon systems that threaten the U.S. and its allies." See, Hunter release. The bill would revoke the trade status that the U.S. extends to the PRC on an annual basis. Last year the U.S. extended permanent normal trade relations status (PNTR) to the PRC. However, that only takes effect when the PRC joins the World Trade Organization. The negotiations over PRC ascension to the WTO drag on.
4/4. The House Judiciary Committee's Subcommittee on Courts, Internet, and Intellectual Property held a hearing on business method patents. Rep. Howard Coble (R-NC), the Chairman of the Subcommittee, defended business method patents in his opening statement. He stated that "intellectual property and the Internet are compatible. In fact, there is a long history of method patents and software enabled inventions." Rep. Howard Berman (D-CA) and Rep. Rick Boucher (D-VA) advocated legislation to reform the business method patents process. On April 3 they introduced HR 1333, the Business Method Patent Improvement Act of 2001. Rep. Zoe Lofgren (D-Silicon Valley) and Rep. Asa Hutchison (R-AR) also attended, but did not speak. Rep. John Conyers (D-MI), the Ranking Member of the full committee, did not attend, but submitted a statement for the record.
Rep. Berman stated two concerns about business method patents in his prepared statement. First, "Should patent protection be granted to processes for achieving a business objective when such processes involve no physical transformation, physical element, technological innovation, or industrial application? Put another way, should an abstract idea for conducting or organizing business operations receive patent protection?" He continued that "My second set of concerns involves the quality of some business method patents issued by the PTO in recent years." See also, April 3 statement in the Congressional Record.
Rep. Boucher stated that "something is fundamentally wrong with a system that enables individuals to get patents for doing the seemingly obvious. Some examples. Priceline today is utilizing a business method patent on a reverse auction, name your own price system, on the Internet. This patent was awarded even though the market economy of the western world, and the entire theory of microeconomics, is predicated on individuals setting the price at which they are willing to purchase something." He added that the awarding of business method patents results in "the restriction of competition, and the lessening of innovation, precisely the opposite of the result that the patent laws are designed to achieve."
Nicholas Godici, the acting head of the USPTO, reviewed the "Business Methods Patent Initiative," a program intended to improve the process. The USPTO is establishing partnerships with affected industries so that they can educate patent examiners, establishing "Electronic Information Centers" which provide examiners with access to over 900 databases, confirming that patent examiners have authority to ask for information that may be necessary to examine a patent application, and instituting a second level review of allowed business method patent applications. He stated that the result of the initiative has been a decrease in the allowance rate.
Michael Kirk, Exec. Dir. of the American Intellectual Property Law Association (AIPLA), and Ronald Myrick, President of the Intellectual Property Owners Association (IPO) both stated their opposition to any legislation in the area of business method patents.
Andrew Steinberg, General Counsel of Travelocity, was the sole witness to oppose business method patents. He said that "we believe that the proliferation of these patents represents a serious threat to the growth of electronic commerce and, if left unchecked, could impede the ability of many businesses to adapt to the Internet. We urge Congress to take prompt action to prevent this from occurring." He also expressed support for the Berman Boucher bill.
4/4. Rep. Coble stated at the hearing on business method patents that "My number one priority in Congress is to work to ensure that the PTO can retain all of its fees to improve the quality of examination to be as high as humanly possible." On April 3, Reps. Berman and Boucher introduced H.Res. 110, a resolution that would accomplish this. Rep. Conyers suggesting in his statement that one of the root problems with business method patents is that the diversion of fees deprives the USPTO of the funds necessary to modernize. The IPO's Myrick, and the AIPLA's Kirk, both stated their support for ending the diversion. However, the Kirk noted that under President Bush's budget, $200 Million may be diverted in FY 2002.
4/4. Rep. John Dingell (D-MI), the Ranking Member of the House Commerce Committee, gave an address in Washington DC in which he advocated FCC reform and passage of the Tauzin Dingell bill. "The FCC must be transformed to meet the needs of the Information Age," said Dingell. "Too often the FCC is hamstrung by dint of its antiquated design. Separate bureaus assigned to each segment of the industry may have worked well enough in days gone by. But today the FCC's fiefdom mentality is simply a relic – ill-equipped to handle the convergence of technology that is at the heart of this modern industry." He added that "It makes no sense for broadband services offered by a cable company to be regulated differently than broadband services offered by a telephone company, wireless provider, or any other communications company for that matter. That is why Chairman Tauzin and I introduced HR 2420 last Congress" and "intend to re-introduce broadband regulatory reform legislation shortly after the Spring recess".
4/4. Telephone and Data Systems filed a comment [PDF] with the FCC in support of Verizon Wireless's petition to the FCC [PDF] of March 27 to defer action on ITFS and MDS applications. "TDS agrees with Verizon Wireless that the FCC should not now take actions which may preclude use of the 2500-2690 MHz band for 3G purposes." TDS continued that "it is, at present, difficult to discern a clear path to an adequate allocation of spectrum for 3G purposes. Yet the public interest requires that a path to an adequate frequency allocation for 3G must somehow be found. Such a path may involve innovative forms of spectrum sharing or segmentation or new types of frequency pairing. And, given the Defense Department's adamant opposition to giving up many of the frequencies it uses, the FCC may have to consider reallocation or sharing of some of the MDS/ITFS frequencies, if there is to be a 3G allocation. Thus, TDS believes Verizon Wireless to be entirely correct that the FCC's Mass Media Bureau should not now grant the pending two-way applications."
4/4. SBC submitted a Section 271 petition to the FCC for permission to offer long distance service in Missouri. On March 6 the Missouri Public Service Commission endorsed SBC's application. See, SBC release.
4/4. The Senate Judiciary Committee's Immigration Subcommittee held a hearing on immigration policy. Sen. Sam Brownback (R-KS), the new Chairman of the Subcommittee, presided. See, statement of Sen. Pat Leahy (D-VT), Ranking Member of the full committee.
4/4. The House Veterans' Affairs Committee's Oversight and Investigations Subcommittee held a hearing on information technology. See, prepared testimony of witnesses: Richard Griffin (Inspector General, Department of Veterans Affairs), David McClure (General Accounting Office), Ken Brandt (Tiger Testing), Scott Sherman (EMC2 Corporation), Karl Ware (BioNetrix Systems Corporation), and Anthony Principi (Secretary, Department of Veterans). McClure testified that "the department has encountered numerous and consistent challenges associated with managing IT, including ... ineffective computer security management." In addition, House Speaker Dick Armey (R-TX) submitted a statement for the record, in which he stated that the VA "is not the only agency with such a poor track record." He cited the Horn subcommittee report on agency computer security, and last year's GAO report that found that 97% of federal agency web sites failed to meet the privacy standards recommended by the FTC for private sector web sites. He concluded by condemning "the Clinton Administration's eleventh hour imposition of new regulations addressing medical privacy issued under the Health Insurance Portability and Accountability Act (HIPAA)" for "putting even more private, personally identifiable medical information in the hands of health care bureaucrats."
4/4. The GAO released a report [PDF] titled Information Security: Safeguarding of Data in Excessed Department of Energy Computers. It stated that the "DOE does not have standardized instructions, verification procedures, or training for agency and contract employees on how to properly clear excessed computers. DOE also does not ensure that procedures used to remove all software, information, and data from systems are effective. As a result, some of the excessed computers we inspected at DOE headquarters had information still stored on the hard drives."
4/4. The NTIA published in its web site electronic comments that it has received regarding the benefits and burdens of requiring consumer consent to receive information electronically. On April 3 the NTIA and FTC held a public workshop on this topic. These agencies are required by the E-SIGN Act, passed last year, to conduct a study. See, comments from United Parcel Service, Federal Express Corporation,, and Household Bank.
4/4. President Bush nominated Theodore Kassinger to be General Counsel of the Department of Commerce. See, release.
4/4. Rep. Mike Rogers (MI) introduced HR 1408, a bill intended to stop financial fraud by creating a new computerized network that would link together the anti-fraud databases of various financial regulators and law enforcement agencies. Rep. Michael Oxley (R-OH), Chairman of the House Financial Services Committee, is an original cosponsor. See, release.
4/4. A grand jury of the U.S. District Court (NDCal) returned an indictment against Geoffrey Osowski and Wilson Tang charging one count of conspiracy to commit computer and wire fraud in violation of 18 U.S.C. § 371, one count of computer fraud in violation of 18 U.S.C. § 1030(a)(4), and three counts of wire fraud in violation of 18 U.S.C. § 1343. The indictment states that defendants used their positions as accountants at Cisco to illegally obtain Cisco stock; they exceeded their authorized access to computer systems at Cisco in order to enter a computer system used by the company to manage stock option disbursals, used their unauthorized access to identify control numbers to track authorized stock option disbursals, created forged forms purporting to authorize disbursals of stock, faxed the forged requests to the company issuing Cisco stock, and directed that stock be placed in their brokerage accounts. The total value of these shares was about $2.3 Million. Joseph Sullivan of the USAO Computer Hacking and Intellectual Property Unit is prosecuting the case. See, FBI affidavit. See also, USAO release.
4/4. The intellectual property law firm of Townsend Townsend & Crew elevated five attorneys to partner: John Baum, Mark Barrish, Byron Cooper, Stephen Pang, William Kezer. John Baum, of the San Francisco office, concentrates on trademark and copyright prosecution, licensing and litigation. He advises Internet businesses on domain name, trademark and copyright matters, and handling administrative procedures with the U.S. Customs Service relating to the protection of IPR and gray market goods. Mark Barrish, of the Palo Alto office, concentrates on developing patent portfolios in the medical device, fiberoptic and mechanical fields. Byron Cooper, of the Palo Alto office, handles patent cases involving integrated circuits, computer microprocessors, DRAMs, disk drive technology, software and video and sound compression. Stephen Pang, of the Palo Alto office, focuses on Internet and software-related technologies, primarily counseling and patent prosecution for emerging technology companies. William Kezer, of the Walnut Creek office, concentrates on chemical and biotechnology patent prosecution. See, release.
4/4. The Senate Judiciary Committee's Antitrust, Business Rights, and Competition Subcommittee held a hearing to examine competitive choices concerning cable and video. Sen. Mike DeWine (R-OH) presided. See, prepared testimony of witnesses: Eddy Hartenstein (DIRECTV Global), Robert Sachs (National Cable Television Association), Jerry Kent (Charter Communications), Robert Currey (RCN Corporation), and Gene Kimmelman (Consumers Union).
4/3. The U.S. Court of Appeals (2ndCir) issued its opinion in Davis v. The Gap, a case regarding damages in copyright infringement actions, and the fair use doctrine. Affirmed in part, vacated in part, and remanded.
4/3. Rep. Howard Berman (D-CA) and Rep. Rick Boucher (D-VA) introduced HR 1333, the Business Method Patent Improvement Act of 2001. This bill is a revision of a similar bill (HR 5364) introduced by Reps. Berman and Boucher last October at the end of the 106th Congress. The new bill, HR 1333, requires the USPTO to publish all business method patent applications after 18 months. It creates opportunities for the public to present prior art or public use information before a business method patent issues. It also establishes a process where parties can challenge a granted business method patent in an expeditious, less costly alternative to litigation. "We must make sure that business method patents now issued are of the highest quality," Rep. Berman said in a releae. "Since questions have arisen about whether this is the case, Congress must take a close look at how the U.S. patent system is functioning in this new, and rapidly growing area of patenting."
4/3. The House Judiciary Committee's Courts, Internet and Intellectual Property Subcommittee will hold a hearing on April 4. Rep. Berman is the Ranking Member of this subcommittee, and Rep. Boucher is one of its senior members. The Senate Judiciary Committee will take up the issue after the two week Easter recess. It is scheduled to hold a hearing on business method patents on May 1, and a hearing on genetic and biotech patents on May 8.
4/3. Reps. Berman and Boucher also introduced HR 1332, the Patent Improvement Act of 2001. It would establish a process by which a party could challenge any granted patent in an expeditious, less costly alternative to litigation.
4/3. Reps. Berman and Boucher also introduced H.Res 110, a resolution to bar the House from permitting the diversion of USPTO user fees to fund other government programs. It provides that "it shall not be in order in the House of Representatives to consider any bill, joint resolution, amendment, motion, or conference report that makes available funds to the United States Patent and Trademark Office for any fiscal year, or for any other period for which the funds are provided, in amounts less than the total amount of patent and trademark fees collected by the United States Patent and Trademark Office ..."
4/3. The Senate Judiciary Committee held a hearing on online entertainment and copyright law. See, opening statements of Sen. Orrin Hatch and Sen. Pat Leahy, the Chairman and Ranking Member of the Committee. See also, prepared testimony of witnesses: Richard Parsons (AOL TimeWarner), Jack Valenti (MPAA), Don Henley, Alanis Morissette, Hank Barry (Napster), Steve Gottlieb (TVT Records), Ken Berry (EMI), Gerry Kearby, Liquid Audio), Hilary Rosen (RIAA), Robin Richards (, Ed Murphy (NMPA), Mike Farrace (Tower Records), Sally Greenberg (Consumers Union), and Edmund Fish (InterTrust Technologies).
4/3. Rep. Johnny Isakson (R-GA) introduced HR 1349, a bill to repeal the 50% limitation on courses offered through telecommunications for student financial assistance programs. It was referred to the Committee on Education and the Workforce.
4/3. Rep. Marge Roukema (R-NJ) introduced HR 1365, a bill to amend title III of the Elementary and Secondary Education Act of 1965 to provide for digital education partnerships. It was referred to the Committee on Education and the Workforce.
4/3. The U.S. Court of Appeals (9thCir) issued an order revising its slip opinion of February 12 in A&M Records v. Napster. There are only three minor changes to citations.
4/3. The FTC and Microsoft and Hewlett Packard (HP) reached agreements regarding their marketing of handheld computers. These matters concern the "Can Your Palm Do That?" ads for the HP Jornada Pocket PC. The two companies agreed that they "shall not misrepresent, in any manner, expressly or by implication, the ability of such product to access the Internet or email accounts, or any performance characteristic of such product affecting access to the Internet or email accounts." Specifically, the FTC filed an administrative complaint [PDF] against HP, and simultaneously entered into an agreement to settle the matter. The FTC also filed an administrative complaint [PDF] against Microsoft, and simultaneously entered into an agreement to settle the matter. Pocket PC users must purchase and carry additional equipment such as a modem to get mobile access to the Internet and e-mail, a fact not clearly disclosed in the joint Microsoft-HP advertising campaign. See also, FTC release.
4/3. The USPTO held a recruitment meeting for students majoring in engineering, science or computer science who may be interested in becoming patent examiners. For more information, contact or See also, notice.
4/3. The Network for Instructional TV (NITV), which holds 23 ITFS licenses issued by the FCC, filed a comment [PDF] with the FCC opposing Verizon's petition to the FCC [PDF] of March 27 to defer action on ITFS and MDS applications. NITV stated that "Verizon's shrill, eleventh-hour claim that the ITFS/MDS spectrum must be frozen in time pending the outcome of the 3G proceeding shamelessly ignores longstanding FCC rules and policies and the need of American students and teachers for prompt access to broadband educational services." Third Generation (3G) wireless technologies are intended to extend broadband Internet access to portable devices. The FCC is examining whether spectrum in the 2500-2690 MHz band might be reallocated, shared or segmented, for use by 3G technologies. MDS and ITFS operators are incumbent users of spectrum in this band, and don't want to give it up their licenses. See, FCC's ET Docket No. 00-258.
4/3. The House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection held a hearing titled An Examination of Existing Federal Statutes Addressing Information Privacy. Rep. Cliff Stearns (R-FL) presided. This is the third online privacy hearing held by this subcommittee this year. The first two focused on the EU privacy directive, and legal perspectives on proposals for federal regulation of online privacy. This hearing addressed existing laws relating to privacy. It also served to emphasize the point that there are already many statutes on the books regulating privacy.
Rep. Billy Tauzin (R-LA), the Chairman of the full committee, cautioned against the "real and potential unintended consequences in current statutes" in his prepared statement. He elaborated that "while everyone agrees with protecting the privacy of children as they navigate the Internet, experience suggests that the existing statute, the Child Online Privacy Protection Act (COPPA), has forced companies to discontinue a number of products targeted towards children." Rep. John Dingell (D-MI), the Ranking Member of the full committee, criticized the "unbalanced, unfair, or arbitrary witness selection".
The subcommittee heard from nine witnesses in two panels. (Hyperlinks are to the witnesses prepared testimony.)
 • Michael Lamb (Chief Privacy Officer, AT&T ) testified regarding the Customer Propriety Network Information provisions of the Communications Act, the Cable Communications Policy Act, the Telephone Consumer Protection Act, and the Electronic Communications Privacy Act.
 • Anne Fortney (Managing Partner, Lovells) testified regarding the Fair Credit Reporting Act (FCRA), and argued that it should not serve as a paradigm for online privacy legislation.
 • Rick Fischer (Morrison and Foerster) testified regarding the Gramm Leach Bliley Act (GLBA) privacy provisions.
 • Ronald Plesser (Piper Marbury) explained and criticized the Children's Online Privacy Protection Act.
 • Richard Varn (Chief Information Officer, Iowa) testified regarding state perspectives on privacy.
 • Ed Mierzwinski (USPIRG) testified regarding GLBA and the FCRA.
 • Richard Smith (CTO, The Privacy Foundation) explained TiVo's technology and it effects viewers' privacy; he also cautioned that TiVo is just "the tip of the iceberg" -- forthcoming web enabled devices have the potential to impact users' privacy.
 • Frank Torres (Consumers Union).
 • Jonathon Zuck (Association for Competitive Technology).
4/3. Rep. Billy Tauzin (R-LA), Chairman of the House Commerce Committee, published a paper [PDF] titled "Telecom Deregulation, Broadband Deployment, and Economic Growth." The paper was published by the Progress and Freedom Foundation.
He said that the FCC should regulate all broadband services the same. "It is not enough to say that the FCC is structured badly. That is obvious. You have only to look at its bureaus to see that these distinct bureaus were built around an age when communications facilities and services were monopolies, providing distinct functional services in distinct geographical areas. That structure doesn’t fit today's marketplace ... Why should we have different regulation for broadband delivery on a satellite, as opposed to a cable, as opposed to a telephone DSL line, as opposed to a wireless delivery terrestrial system, if it's all the same product that is delivered to the consumer?"
Rep. Tauzin next advocated reform of the FCC's merger review process. He stated that it "has used the process for considering applications for license renewals and license transfers associated with mergers to implement a form of personalized, subjective regulation, which borders upon unconstitutionality."
He also addressed the FCC's e-rate subsidy program. He stated that "When the FCC gave us the E-Rate, a massive tax upon telephone consumers to carry out a building program in the education and hospital and library areas of our country, there was a blurring of all kinds of lines that our founding fathers attempted to draw in our basic structure of government. Here, the FCC is passing taxes; directing corporations to spend money without Congressional oversight and review, or appropriation; and, in fact, executively deciding who gets and who doesn’t get the benefit of these dollars in a way that I believe offends the basic structure of our government." He added that "That sort of activity by the FCC has to stop" and proposed a "blue ribbon commission to work with GAO and provide recommendations".
Tauzin also noted that IT and energy policy are intertwined. "The dot-com and IT sectors of our economy are actually energy guzzlers. ... If we're going to rebuild the IT sector with competent and courageous deregulation, we are going to have to complement it with access to affordable energy. Hence, we need a prompt rewrite of national energy policy."
4/3. The NTIA and FTC held a public workshop on the benefits and burdens of requiring consumer consent to receive information electronically. These agencies are required by the E-SIGN Act, passed last year, to conduct a study.
4/3. The GAO released a report [PDF] titled "Free Trade Area of the Americas: Negotiations at Key Juncture on Eve of April Meetings." The report precedes the meeting of the trade ministers of 34 countries in negotiations in Buenos Aires, Argentina, on April 7, and the Summit of the Americas in Quebec City, Canada, on April 20-22. The report concludes that "Significant challenges will need to be overcome to successfully conclude an agreement."
4/3. The Department of Commerce's Bureau of Export Administration published a notice in the Federal Register that its Information Systems Technical Advisory Committee (ISTAC) will meet on April 18 & 19, 2001 at 9:00 AM in the Herbert C. Hoover Building, Room 3884, 14th Street between Pennsylvania Avenue and Constitution Avenue, NW., Washington, DC. The ISTAC advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to information systems equipment and technology. See, Federal Register, April 3, 2001, Vol. 66, No. 64, Page 17683.
4/3. President Bush announced his intent to nominate Bruce Mehlman to be Assistant Secretary of Commerce for Technology Policy. Mehlman is currently Telecommunications Policy Counsel for Cisco. Previously, he was General Counsel and Policy Director for the House Republican Conference and General Counsel for the National Republican Congressional Committee. See, release.
4/3. AMD filed a complaint in state court in New York against Alcatel Business Systems alleging breach of a contract in connection with the sale of flash memory products to Alcatel. See, AMD release.
4/3.The House Government Reform Committee's Technology and Procurement Subcommittee held a hearing titled "Enterprise-Wide Strategies for Managing Information Resources and Technology: Learning From State and Local Governments". See, prepared testimony [PDF] of David McClure, GAO Director of Information Technology Issues.
4/3. The NTIA published a notice in the Federal Register requesting comments regarding "the advantages accorded signatories of the INTELSAT, in terms of immunities, market access, or otherwise, in the countries or regions served by INTELSAT, the reason for such advantages, and an assessment of progress toward fulfilling a pro-competitive privatization of that organization." Comments are due by May 3, 2001. See, Federal Register, April 3, 2001, Vol. 66, No. 64, Notices, at Pages 17686 - 17687. See also, copy of notice in NTIA web site.
4/2. House Speaker Denny Hastert (R-IL) gave a speech in Chicago, Illinois, in which he addressed Internet taxes and privacy. He said that "Congress originally enacted the moratorium to prevent thousands of state and local taxing jurisdictions from using the Internet as a cash cow. Well, in October, the moratorium ends. Rather than slow down the Internet with a slew of new taxes, we must extend the moratorium ..." He also said that "I believe it is the Internet technology industry's job to lead when it comes to privacy matters."
4/2. Sen. Charles Schumer (D-NY) introduced S 671, a bill to provide for public library construction and technology enhancement. It was referred to the Senate Committee on Health, Education, Labor, and Pensions.
4/2. The GAO released a report [PDF] titled "Information Management: Electronic Dissemination of Government Publications."
4/2. The law firm of Latham & Watkins made Karen Brinkmann a partner. She works in the Washington DC office, and focuses on regulatory and transactional issues in the telecommunications, information technology and electronic media sectors. She worked at the FCC from 1993 to 1997. See, release.
4/2. The law firm of Latham & Watkins made Marcellus Williamson a partner. He works in the Washington DC office, and focuses on antitrust matters, litigating Clayton, Sherman and Robinson-Patman cases and obtaining U.S. and international approvals for transactions. See, release.
4/2. The ICANN Board of Directors approved proposed revisions to VeriSign's contract to operate the .com, .net, and .org registries. Under the revisions, the .com agreement would expire on November 10, 2007, and VeriSign would have a right at that time to renew for a four year term if it satisfies the criteria set forth in the agreement. Also, the .org agreement would expire on December 31, 2002, and VeriSign would not be eligible to seek to renew it. Finally, the .net agreement would expire on January 1, 2006, and it would then be subject to a competitive renewal process. See, ICANN release. The proposed revisions were adopted by the ICANN Board of Directors by a vote of 12 to 3. They are still subject to ratification by the U.S. Department of Commerce.
4/2. Napster held a "teach in" on music file copying at the Catholic University law school in Washington DC. See, Napster notice. Meanwhile, the Recording Industry Association of America (RIAA) launched a website called No Free Lunchster to provide its arguments, and statements by artists. On Tuesday, April 3, the Senate Judiciary Committee will hold a hearing on online entertainment and copyright law.
4/2. Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee, gave a speech to the Tax Executives Institute, in which he reviewed tax issues likely to be addressed by the Senate this year, including the R&D tax credit, Internet taxes, and the Foreign Sales Corporation (FSC) tax regime. He made no predictions about the R&D tax credit, but pointed out that the only corporate tax provision in President Bush's tax plan is making the R&D tax credit permanent.
Sen. Grassley stated that "It is very likely that the Finance Committee will address electronic commerce issues this year. The present federal moratorium on the states' ability to tax Internet transactions expires this fall. The challenging issues involved in the interstate and international aspects of Internet transactions will certainly be part of the Finance Committee's upcoming slate of projects."
Sen. Grassley also touched on the ongoing FSC dispute. "Many of you have been closely following last year's legislation repealing the foreign sales corporation provisions. It appears the WTO will not issue a decision until this summer. Be assured that the Finance Committee is following the WTO case closely and is prepared to respond if necessary." The FSC tax regime (which the WTO ruled to be an illegal export subsidy), and the replacement legislation (enacted late last year, and currently under review by the WTO), benefit U.S. high tech exporters.
4/2. Robert Koppel, VP of Wireless Regulatory Affairs for WorldCom, called Verizon Wireless' request to delay MDS and ITFS applications "a transparent and unconscionable effort to use the regulatory process to delay broadband competition to Verizon's DSL service." See, WorldCom's comment [PDF] of April 2, and Verizon's petition to the FCC [PDF] of March 27. The FCC is examining whether spectrum in the 2500-2690 MHz band might be reallocated, shared or segmented, for use by Third Generation (3G) wireless technologies. MDS and ITFS operators are incumbent users of spectrum in this band. See, FCC's ET Docket No. 00-258.
4/2. The National Association of Broadcasters (NAB) submitted a request [PDF] to intervene, or to file an amicus curiae brief, with the Copyright Board of Canadian in its JumpTV proceeding. The NAB stated that it wants to argue "that internet retransmissions of United States broadcast signals by 2000051 Ontario, Inc. ... or any other Canadian entity pursuant to Section 31 of the Canadian Copyright Act could result in devastating consequences for the United States system of free over-the-air broadcasting and could violate the Berne Convention to which both the United States and Canada are signatories."
4/2. The California Supreme Court issued its opinion [PDF] in Preston v. Board of Equalization, a case regarding whether a copyright interest in artwork, transferred in conjunction with the temporary transfer of the tangible artwork itself, is subject to California state sales tax. The California Supreme Court reversed the Court of Appeal, and held that the relevant state statute exempts the copyright transfer at issue from taxation.
4/2. The U.S. Court of Appeals (Fed Cir) heard oral argument in Techsearch v. Intel, Appeal No. 00-1226.
4/2. The U.S. Court of Appeals (Fed Cir) heard oral argument in Semitool v. Novellus Systems, Appeal No. 00-1375.
4/2. The Public Voice, a project of the Electronic Privacy Information Center (EPIC), released a report titled "The Public Voice and the Digital Divide: A Report to the DOT Force."
4/2. The USTR said that it released the results of its annual Section 1377 review of foreign compliance with telecommunications trade agreements. "Telecommunications trade agreements, particularly in the World Trade Organization, have been a driving force in opening up world markets to high-technology trade and investment," said USTR Robert Zoellick in a release. The report addresses anti-competitive practices of state owned, or formerly stated owned, telecom monopolies or dominant carriers in eleven nations. The report addresses four areas of concern regarding Germany's Deutsche Telekom (DT), which is still 58% state owned: unbundled loop rates, excessive colocation conditions and provisioning delays, absence of a reference interconnection offer, and excessive licensing fees. The report states that France Telecom, which remains 54% state owned, has failed to provide essential technical information for interconnection and non-discriminatory colocation, discriminates against competitors in providing access necessary for the competitive provision of DSL services, and receives preferential rights of ways over new entrants. The report also states that over regulation of new entrants and toleration of anticompetitive behavior by the 46% state owned NTT group of companies in Japan have restricted opportunities for new entrants. The report also identifies shortcoming in the United Kingdom, including the failure of British Telecom, the dominant incumbent, to offer non-discriminatory access to facilities necessary for local loop unbundling, and the failure of BT to offer line sharing. The report also addresses Spain, Italy, Mexico, Canada, Columbia, South Africa, and Taiwan. See also, USTR fact sheet and State Dept. release.
4/2. President Bush met at the White House with a group of Senators and Representatives who are active on trade issues. Bush advocated passing fast track trade negotiating authority for the President. He stated that "We've got a lot of work to do in order to get trade promotion authority, but I'm confident that we can work together to do so. ... This is an issue that is going to require close cooperation between members of the Republican Party and the Democrat Party.  But that's achievable ..." See, transcript.
4/2. Dianne Cornell will leave the FCC, where she is currently Associate Bureau Chief of the WTB. She will become VP for Regulatory Policy at the CTIA.
4/2. Debra Valentine, General Counsel of the FTC, will return to the law firm of O'Melveny and Myers as a partner. She worked at the firm prior to joining the FTC in 1995. John Graubert, who is currently the Deputy General Counsel, will be acting General Counsel. See, FTC release.
4/2. The FCC adopted a Second Report and Order adopting modifications to its LPFM service rules. See, FCC release. See, MM Docket 99-25.

Go to News Briefs from March 26-31, 2001.

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