News Briefs from July 11-15, 2001

CompTel Urges Structural Separation
7/14. The Competitive Communications Association (CompTel) released a report [PDF] on structural separation at the National Association of Regulatory Commissioners (NARUC) conference in Seattle, Washington. The report recommends the functional separation of incumbent local exchange carriers (ILECs) into wholesale and retail units. See also, CompTel release.
Felton Versus the DMCA
7/13. The Recording Industry Association of America (RIAA) filed a motion to dismiss and memorandum in support [PDF] in Felton v. RIAA, a case filed by Edward Felton and others in U.S. District Court (DNJ) against the RIAA, SDMI and Attorney General John Ashcroft, seeking a declaration that the Digital Millennium Copyright Act (DMCA) is unconstitutional. The RIAA argues that there is no adversity of interest, and that the plaintiffs lack standing. See also, RIAA release.
The RIAA's memorandum states that the "Plaintiffs' true agenda, however, is not to adjudicate a real dispute but to obtain favorable press attention and to secure an advisory opinion on the constitutionality of the Digital Millennium Copyright Act. Plaintiffs have therefore filed an Amended Complaint full of vaporous imaginings and chimerical fears. We respectfully submit that even the Amended Complaint fails to pass muster, and must be dismissed under Rule 12(b)(1)" of the FRCP.
The plaintiff's lawsuit followed a letter from the Secure Digital Music Initiative (SDMI) to Felton threatening a lawsuit under the DMCA if he published a particular paper. However, the RIAA stated in its memorandum that "Defendant RIAA has repeatedly expressed publicly and in correspondence with Plaintiffs' counsel -- both before and after this lawsuit was filed -- that it has no objection whatsoever to Plaintiffs publishing or presenting their three papers. Thus, as to that aspect of the Amended Complaint, there is no adversity of interests between Plaintiffs and the RIAA ..."
The SDMI. The SDMI is a music industry group that is attempting to develop a watermark based system to prevent music piracy. Watermarking embeds copyright information in digital music files to enable devices like MP3 players and recorders to refuse to make copies of copyrighted music. Last year the SDMI issued a "Public Challenge" to help choose among four proposed watermarking technologies. It invited researchers to attempt to remove the copyright watermarks. Felton responded, and successfully defeated all four technologies. The SDMI then sought to prevent Felton from presenting or publishing his findings.
The Letter. On April 9, Matthew Oppenheim, Secretary of the SDMI Foundation, wrote a letter to Edward Felton, an associate professor in the Department of Computer Science at Princeton University, and others, warning them that public release of information concerning the Secure Digital Music Initiative (SDMI) "could subject you and your research team to actions under the Digital Millennium Copyright Act ..." Felton was scheduled to participate in the 4th International Information Hiding Workshop on April 25-29 in Pittsburgh, Pennsylvania.
The Lawsuit. On June 6, Felton and others filed their Original Complaint in U.S. District Court against the RIAA, SDMI, and AG Ashcroft. The plaintiffs filed their First Amended Complaint on June 26, 2001. The plaintiffs seek a declaration that the DMCA is unconstitutional for violating the First Amendment, and for exceeding the enumerated powers of the Congress. 
Lessig Versus the CTEA
7/13. The U.S. Court of Appeals (DCCir) issued an order and opinion in Eldred v. Ashcroft, a challenge to the constitutionality of the Copyright Term Extension Act. The Appeals Court denied plaintiff's petition for a rehearing en banc.
The original plaintiff of record is Eric Eldred, the proprietor of the unincorporated Eldritch Press, a website that republishes the works of others that are not protected by copyright. However, the suit is being pursued by Laurence Lessig and other law professors who disagree with recently enacted intellectual property statutes.
The 105th Congress passed the Copyright Term Extension Act (CTEA) to extend the maximum duration of copyrights from 75 to 95 years. The late Rep. Sonny Bono (R-CA) sponsored the House version of the bill in 1997. Hence, the statute is also known by his name. (See, P.L. 105-298, 112 Stat. 2827. It amends 17 U.S.C. 304(b).)
On January 11, 1999 the plaintiffs filed their original complaint in U.S. District Court (DDC). (See also, TLJ story.) On June 28, 1999, the plaintiffs filed their Second Amended Complaint. Plaintiffs allege, among other claims, that the CTEA violates the First Amendment and the copyright clause of the Constitution. On October 27, 1999, the District Court ruled that the CTEA does not violate the Constitution. See, Memorandum of the Court. (See also, TLJ story.) On February 16, 2001, the U.S. Court of Appeals (DCCir) issued its opinion affirming the District Court.
Plaintiffs asserted in their petition for rehearing that the Court of Appeals erred in its treatment of the contentions advanced by one of the amici, The Eagle Forum (i.e., Phillys Schlafly). Judge Ginsburg, writing for the Court, rejected the argument. Judge Sentelle dissented.
See also, TLJ summary of Eldred v. Reno.
Fed Circuit Vacates District Court Judgment on Freeny Patent
7/13. The U.S. Court of Appeals (FedCir) issued its opinion in Interactive Gift Express v. Compuserve, an en banc rehearing of an appeal of a judgment of noninfringement of U.S. Patent No. 4,528,643. This patent, also known as the Freeny patent, discloses a system for reproducing information in material objects at point of sale locations. Plaintiff asserts that it applies to sales over the Internet of software, books, and music. The District Court entered a judgment of noninfringement. The Court of Appeals vacated and remanded.
Plaintiff, Interactive Gift Express, which is now known at E-Data Corp., filed a complaint in U.S. District Court (SDNY) against numerous software, publishing, and bookstore companies alleging infringement of the Freeny patent by selling software and documents via the Internet.
The Feeny patent defines the following invention: "A method for reproducing information in material objects utilizing information manufacturing machines located at point of sale locations, comprising the steps of: providing from a source remotely located with respect to the information manufacturing machine the information to be reproduced to the information manufacturing machine, each information being uniquely identified by a catalog code; providing a request reproduction code including a catalog code uniquely identifying the information to be reproduced to the information manufacturing machine requesting to reproduce certain information identified by the catalog code in a material object; providing an authorization code at the information manufacturing machine authorizing the reproduction of the information identified by the catalog code included in the request reproduction codes; and receiving the request reproduction code and the authorization code at the information manufacturing machine and reproducing in a material object the information identified by the catalog code included in the request reproduction code in response to the authorization code authorizing such reproduction."
The Appeals Court held that the District Court erred in at least one aspect of its construction of each of the five claim limitations upon which the judgment of noninfringement was based. The Appeals Court vacated and remand for further proceedings consistent with the claim construction provided in the opinion.
DOJ v. Microsoft
7/13. The Department of Justice and state plaintiffs in the Microsoft antitrust case filed a Motion for Immediate Issuance of Mandate with the U.S. Court of Appeals (DCCir) in order to allow "proceedings on remand to go forward as quickly as possible." The motion also states that "The United States and the State Plaintiffs do not intend to petition for rehearing" and that "the United States and the State Plaintiffs do not intend to seek Supreme Court review of the case at this stage." The motion asks the Appeals Court promptly remand the case to the U.S. District Court (DDC).
Michigan Bell v. Engler
7/13. The U.S. Court of Appeals (6thCir) issued its opinion in Michigan Bell v. Engler, a challenge to a Michigan statute abolishing the end user common line charge on phone customers. Phone companies filed a complaint in the U.S. District Court (EDMich) challenging § 310(7) of the Michigan Telecommunications Act (MTA) of 2000. The District Court denied Plaintiffs' request for a preliminary injunction of § 310(7). However, the District Court enjoined another provision of the MTA, § 701, which froze certain regulated telephone rates at their May 1, 2000 level until December 31, 2003. The phone companies appealed, and Michigan cross appealed. The Court of Appeals affirmed the District Court's order preliminarily enjoining § 701, and reversed its order denying the motion to enjoin § 310(7).
FCC Commissioner Tristani Addresses Cable Mergers
7/13. FCC Commissioner Gloria Tristani gave a speech in Washington DC to the Alliance for Community Media titled "Public, Educational, and Governmental Access Channels: Localism and Diversity In Action." She also addressed mergers. She stated that "As cable operators get bigger, control over programming will be held by fewer and fewer gatekeepers. This enormous power concerns me. It's one thing to say there are a diversity of voices out there, and the Internet will ensure that no one exerts undue control over America's information conduits. But look where the vast majority of Americans spend the most of their free time - in front of the television." She continued that "the content of television has far more influence on what Americans know, what they think, and how they govern themselves that whatever is on the Internet or in the newspapers. Television is a uniquely powerful and influential medium, and government regulators should think long and hard before approving another round of cable consolidation."
7/13. The U.S. District Court (SDCal) sentenced Ira Itskowitz, Daniel Rearick, and Linsday Wellman for various crimes associated with a telemarketing operation that defrauded over 3,000 victims of almost $50,000,000 through its design, development and marketing of a series of "high-tech" telecommunications related securities. Itskowitz was sentenced to 71 months imprisonment, 3 years supervised release, and ordered to pay $49,031,740 in restitution to victims. Rearick was sentenced to 60 months imprisonment, 3 years supervised release, and ordered to pay $46,526,740 in restitution to victims. Lindsay Wellman, an attorney who conspired to structure $149,000 in currency transactions under $10,000.00 each to avoid reporting requirements of the IRS was sentenced to 3 years supervised probation with 8 months custody in a community confinement center. See, USAO release.
Securities Fraud
7/13. The SEC filed a civil complaint in U.S. District Court (DColo) against William Brotherton and International Business Consortium, a business founded by Brotherton, for perpetrating a fraudulent and unregistered securities offering over the Internet. (Civil Action No. 01-WM-1340.) See, SEC release.
People and Appointments
7/13. Rep. Bob Goodlatte (R-VA), a Co-Chair of the Internet Caucus, named Janet Polarek as his new press secretary. She replaces Michelle Semones, who joined Dittus Communications, a Washington DC based public relations firm, as Associate Director of Technology Policy.
House Holds Hearing on Internet Gambling
7/12. The House Financial Service Committee's Oversight and Investigations Subcommittee held a hearing on Internet gambling. Rep. John LaFalce (D-NY) stated that he will shortly reintroduce two bills to prohibit the use of credit card debt to place bets over the Internet, and to prohibit the placement of ATMs close to gambling sites. See also, HR 4419 (106th Congress), sponsored by Reps. Leach and LaFalce. Rep. Jim Leach (R-IA) stated that the Financial Services Committee has jurisdiction over the only effective enforcement enforcement mechanisms. Sen. Jon Kyl (R-AZ) and Rep. Bob Goodlatte (R-VA) have sponsored legislation in the previous two Congresses to ban many forms of Internet gambling. These bills include attempts to enforce the ban at the ISP level. No Internet gambling bill has yet been enacted into law.
Subcommittee Chairman Sue Kelly (R-NY), said in her opening testimony [PDF] that "the most serious offenders in the Internet gambling arena are the virtual casinos operating offshore, beyond the reach of U.S. law." She also stated that she would "work with the legislative Subcommittees under this Committee to support appropriate legislative action". Committee Chairman Mike Oxley (R-OH) did not advocate any specific legislative solutions in his opening statement [PDF].
John Suarez, of the state of New Jersey, complained that off shore gambling sites are advertising in New Jersey, and allowing minors to gamble on their sites. He suggested that Congress "declare that any credit card or other wager placed via the Internet is illegal and therefore uncollectable in the United States." Sebastian Sinclair, of Christiansen Capital Advisors, did not dispute the problems associated with online gambling, but cautioned the Subcommittee to "keep your friends close, and your enemies closer." For example, he stated that making credit card gambling debts uncollectable would simply drive online gamblers to use foreign banks and third party payment mechanisms, such as PayPal.
See also, prepared statements of witnesses in PDF: John Suarez (New Jersey Division of Gaming Enforcement), Sebastian Sinclair (Christiansen Capital Advisors), Keith Whyte (National Council on Problem Gambling), Valerie Lorenz (Compulsive Gambling Center), Frank Fahrenkopf (American Gaming Association), Bill Saum (National Collegiate Athletic Association), Mark MacCarthy (VISA), Sue Schneider (Interactive Gaming Council), Penelope Kyle (Virginia Lottery), Greg Avioli (National Thoroughbred Racing Association).
House Committee Holds Hearing on Whois Database
7/12. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property held a hearing titled The Whois Database: Privacy and Intellectual Property Issues.
Rep. Howard Coble (R-NC), Chairman of the Subcommittee, said in his opening statement that "It is my hope that as the Internet grows and these policies develop, the public can count on the availability of a robust and dynamic Whois Database." Rep. Howard Berman (D-CA), the ranking Democrat, said in his opening statement that "For web sites conducting e-commerce, why should they have a privacy right to keep their place of business and controlling owner a secret? ... however, a person who has a website for purely personal reasons, pictures of his cat, perhaps, or political complaints against a Member of Congress - shouldn't that person be able to do his personal business without everyone knowing who he is and how he can be found? And isn't political speech worth protecting by redacting the personally identifiable contact information for the website owner?"
See also, prepared statements of witnesses: Jason Catlett (Junkbusters), Lori Fena (TRUSTe), Stevan Mitchell (Interactive Digital Software Assoc.), and Timothy Trainer (International Anti Counterfeiting Coalition).
4th Circuit Rules in Cybersquatting Case
7/12. The U.S. Court of Appeals (4thCir) issued its "unpublished" opinion in Domain Name Clearing Company v. FCF, a cybersquatting case. The Appeals Court affirmed the District Court decision which held that DNCC had violated the 1999 Anticybersquatting Consumer Protection Act by registering the domain name
8th Circuit Rules in Trademark Case
7/12. The U.S. Court of Appeals (8thCir) issued its opinion in National Association for Healthcare Communications v. Central Arkansas Area Agency on Aging, a case brought under the Lanham Act and state law to determine which party has the superior right to use the service mark "CareLink" in Arkansas.
Crime on the Internet
7/12. The U.S. Court of Appeals (1stCir) issued its opinion in USA v. Brunette, a criminal case involving the validity of search warrants used to seize evidence of child pormography located on computers and in other locations. Affirmed.
7/12. The U.S. Court of Appeals (7thCir) issued its opinion in USA v. Bautista, a criminal case involving sentencing for traveling in interstate commerce with the intent and for the purpose of engaging in sexual acts with a minor, in violation of 18 U.S.C. § 2423(b). Defendant had communicated in an Internet chat room with an undercover police officer posing as a 13 year old. The Appeals Court vacated the sentence on the grounds that it was too light.
Collocation Rules
7/12. The FCC adopted rules concerning collocation requirements of incumbent local exchange carriers (ILECs). The FCC did not release the rules. It did release a press release. The USTA, which represents ILECs, criticized the rules. See, USTA release.
GAO Issues Report on Legal Obstacles to Telecommuting
7/12. The GAO released a report [PDF] titled "Telecommuting: Overview of Potential Barriers Facing Employers." The report concludes that state and federal laws and regulations present potential barriers to telecommuting. These include state tax laws that could expose employers and employees to additional state taxes and federal workplace health and safety laws and regulations that could be applied to telecommuters' home offices.
The report also states that "many telecommuting proponents believe that significant obstacles to increased use of telecommuting involve internal management concerns related to (1) assessing whether the employer has the types of positions and employees suitable for a telecommuting program, (2) maintaining security over sensitive company data while monitoring the actions of remote workers, and (3) ensuring that telecommuting activities do not adversely affect profits." The report was prepared at the request of House Majority Leader Dick Armey (R-TX).
People and Appointments
7/12. SEC Acting Chairman Laura Unger named Stephen Cutler Acting Director of the Division of Enforcement. Cutler has been the Division's Deputy Director since January 1999. He replaces Richard Walker, who recently announced his intention to leave the SEC. See, SEC release. Cutler worked at Wilmer Cutler and Pickering from 1987 until being appointed to the SEC in 1998.
7/12. The FCC announced the appointment of new federal and state members to the Federal State Joint Board on Universal Service. FCC Commissioners Kathleen Abernathy and Kevin Martin were appointed as federal representatives, replacing former FCC Commissioners Susan Ness and Harold Furchtgott- Roth. Commissioner Lila Jaber of the Florida Public Service Commission and Commissioner Thomas Dunleavy of the New York Public Service Commission were appointed to serve as state representatives, replacing Pat Wood, former Chairman of the Texas Public Utility Commission, and the late Laska Schoenfelder, former Commissioner of the South Dakota Public Utilities Commission. See, FCC release [PDF].
7/12. The Senate Banking Committee approved several nominations, including Roger Ferguson (Board of Governors of the Federal Reserve System), Donald Powell (Chairman of the Federal Deposit Insurance Corporation), Angela Antonelli (CFO of the Department of Housing and Urban Development), Jennifer Dorn (Federal Transit Administrator), and Ronald Rosenfeld (President of the Government National Mortgage Association, GINNIE MAE).
More News
7/12. Napster settled the lawsuit filed against it by rock band Metallica for copyright infringement. See, Napster release and Metallica release.
4th Circuit Rules Against Henrico Open Access Requirement
7/11. The U.S. Court of Appeals (4thCir) issued its opinion in MediaOne v. County of Henrico, affirming the District Court's ruling that the County of Henrico's open access requirement is preempted by federal law. The Appeals Court held that "Henrico County violated § 541(b)(3)(D)" of the Communications Act "when it conditioned the transfer of control of MediaOne's cable franchise by requiring MediaOne to unbundle its Road Runner service and provide open access to its telecommunications facilities, that is, its cable modem platform. Because the open access provision is inconsistent with the federal Communications Act, it is preempted."
Facts. MediaOne is a cable company with a license from Henrico County (i.e., Richmond, Virginia). AT&T acquired MediaOne in 1999. AT&T and MediaOne applied to Henrico for approval of the transfer of control of MediaOne's license. Henrico conditioned its approval with an open access requirement. It required that AT&T and MediaOne "shall provide any requesting Internet Service Provider (ISP) access to its cable modem platform (unbundled from the provision of content) on rates, terms, and conditions that are at least as favorable as those on which it provides such access to itself, to its affiliates, or to any other person." (Parentheses in original.)
Trial Court. AT&T and MediaOne filed a complaint in U.S. District Court (EDVa) seeking a declaratory judgment that the open access condition violates the First Amendment and the Commerce Clause, is preempted by federal law, and is void under Virginia law. AT&T and MediaOne moved for summary judgment on the grounds that the open access requirement is preempted by the Communications Act of 1934, and is unenforceable under Virginia law. The district court granted AT&T and MediaOne's motion for summary judgment on the grounds that the open access condition was preempted by several provisions of the Communications Act. (See, MediaOne v. Henrico, 97 F. Supp. 2d 712 (E.D. Va. 2000).)
Section 541(b)(3)(D). § 541(b)(3)(D) of the Communications Act provides that "a franchising authority may not require a cable operator to provide any telecommunications service or facilities, other than institutional networks, as a condition of the initial grant of a franchise, franchise renewal, or a transfer of a franchise."
4th Circuit Holding. The Court held that Henrico's open access provision required MediaOne to provide telecommunications facilities in violation of § 541(b)(3)(D). However, the Court did not rule on the specific regulatory classification of MediaOne's Road Runner service. The Court merely reasoned as follows: "MediaOne's Road Runner service combines the use of a cable modem platform with access to the Internet. Road Runner's cable modem platform, separated from its Internet service component, is a telecommunications facility because it is a pipeline for telecommunications, that is, for "the transmission . . . of information of the user's choosing, without change in the form or content." Id. § 153(43) (defining "telecommunications"). As a condition for approving the change in control of the MediaOne franchise, the County required MediaOne to provide its "cable modem platform (unbundled from the provision of content)" to "any requesting Internet Service Provider." The provision unbundles Road Runner's Internet access service from its cable modem platform and compels MediaOne to offer the platform to unaffiliated ISPs for use as a transmission pipeline for their services. The open access provision therefore requires MediaOne to provide "telecommunications ... facilities ... as a condition of ... a transfer of a franchise" in violation of § 541(b)(3)(D)."
FCC NOI Re Internet Access Over Cable. The Court also noted that FCC has issued a Notice of Inquiry [PDF] that seeks comment on whether cable modem technology should be classified as a cable service, a telecommunications service, or an information service, and the implications of adopting any particular classification. (See, GN Docket No. 00-185.) The Court then concluded that "we do not have to reach the question of whether MediaOne's bundled Road Runner service is a cable service, a telecommunications service, or an information service. For the time being, therefore, we are content to leave these issues to the expertise of the FCC."
The three judge panel was composed of Judges Blane Michael, William Wilkins and Emory Widener. Judge Michael wrote the opinion of the court, in which Judge Wilkins joined. Judge Widener wrote a concurring opinion. He concurred in the result, but not the analysis. He wrote that it was unnecessary to decide the federal preemption issue, because Henrico's action was barred by Virginia state law.
Reaction. NCTA P/CEO Robert Sachs said in a release that "The Fourth Circuit's decision in the Henrico case offers the strongest judicial affirmation yet that public policy decisions regarding cable modem services are not within the jurisdiction of local governments. Today's court decision will further encourage the rapid deployment of high speed cable Internet services to consumers."
Court Limits Discovery Regarding Identity of Anonymous Posters
7/11. The Superior Court of New Jersey, Appellate Division, issued its opinion in Dendrite International v. John Doe, a case regarding discovery requests for the identity of anonymous posters to message boards. The Court established a three part test that must be met before the trial court may issue an order compelling discovery from an ISP regarding the identity of an anonymous poster to one of its message boards who has been sued for defamation or other claims based on the content of his posting.
Background. An anonymous poster, known in this litigation as John Doe 3, posted messages on a Yahoo message board critical of Dendrite International, a business which provides software products and support services for the pharmaceutical industry. Dendrite filed a complaint in Superior Court of New Jersey against John Doe 3, and other John Doe defendants, alleging various claims for breach of contract, defamation and other actionable statements on Yahoo's message board. Dendrite then sought pre-trial discovery from Yahoo regarding the identities of the anonymous defendants. The trial court denied a motion to compel discovery. This appeal followed.
Holding. The appeals court affirmed the denial of the motion to compel discovery. The appeals court articulated a set of standards for reviewing such requests. The appeals court wrote that "The trial court must consider and decide those applications by striking a balance between the well- established First Amendment right to speak anonymously, and the right of the plaintiff to protect its proprietary interests and reputation through the assertion of recognizable claims based on the actionable conduct of the anonymous, fictitiously- named defendants." In addition, the appeals court listed three requirements. First, the plaintiff must make efforts to notify the anonymous defendant of the discovery request, including by posting to the message board involved in the case. Second, the trial court must determine that the plaintiff has plead a prima facie cause of action and produced evidence in support. Third, the trial court must balance the interests of the parties.
Notice to Anonymous Defendants. The appeals court wrote that "the trial court should first require the plaintiff to undertake efforts to notify the anonymous posters that they are the subject of a subpoena or application for an order of disclosure, and withhold action to afford the fictitiously- named defendants a reasonable opportunity to file and serve opposition to the application. These notification efforts should include posting a message of notification of the identity discovery request to the anonymous user on the ISP's pertinent message board."
Prima Facie Case and Evidence. The appeals court wrote that "The court shall also require the plaintiff to identify and set forth the exact statements purportedly made by each anonymous poster that plaintiff alleges constitutes actionable speech. The complaint and all information provided to the court should be carefully reviewed to determine whether plaintiff has set forth a prima facie cause of action against the fictitiously- named anonymous defendants. In addition to establishing that its action can withstand a motion to dismiss for failure to state a claim upon which relief can be granted ..., the plaintiff must produce sufficient evidence supporting each element of its cause of action ..."
Balancing Test. The appeals court wrote that "the court must balance the defendant's First Amendment right of anonymous free speech against the strength of the prima facie case presented and the necessity for the disclosure of the anonymous defendant's identity to allow the plaintiff to properly proceed."
Public Citizen and the American Civil Liberties Union Foundation of New Jersey, which participated as amici curiae, praised the decision, and called it "a tremendous victory for free speech." See, PC release.
District Court Issues Order in Napster Case
7/11. The U.S. District Court (NDCal), Judge Marilyn Hall presiding, issued an order in A&M Records v. Napster requiring Napster to block all copying of infringing music files. Judge Hall also held a closed meeting with the parties. Napster CEO Hank Berry issued a statement in which he said that "The Judge issued an order prohibiting Napster from enabling file transfers unless Napster reaches 100% success. The Court delegated to the technical expert further examination and testing of the Napster system. The Court's ruling today that Napster must block all file transfers threatens all peer-to-peer file sharing over the Internet and is at direct odds with the 9th Circuit's ruling. While we are disappointed by this ruling, we will work with the technical expert to enable file transfers as soon as possible and we are continuing full steam ahead toward the launch of our new service later this summer." RIAA P/CEO Hillary Rosen had this reaction: "Judge Patel's decision today that Napster should not resume operations until it can show that it can comply with the court's modified preliminary injunction was inevitable given its failure to comply with the court's order for so long."
§ 271 InterLATA Services Means Both Data and Voice
7/11. The FCC published in the Federal Register a notice of its final rule in "Implementation of the Non- Accounting Safeguards of Section 271 and 272 of the Communications Act of 1934," CC Docket No. 96-149. The FCC ruled that the term "interLATA service" used in § 271 encompasses interLATA information services as well as interLATA telecommunications services. See, Federal Register, July 11, 2001, Vol. 66, No. 133, at Pages 36206 - 36208.
Background. Section 271 of the Communications Act of 1934 provides that the Bell companies may not provide "interLATA services" until they have satisfied the FCC that they have opened up their local networks to competitors. In a previous Non- Accounting Safeguards Order, the FCC concluded that the term "interLATA services" as used in section 271 encompasses interLATA telecommunications services and interLATA information services. The predecessor companies of Verizon and Qwest petitioned for judicial review. However, because their arguments had not been raised in the administrative proceeding, the U.S. Court of Appeals (DCCir) remanded this matter. The present rule is the reconsideration on remand.
Federal Chief Information Officer
7/11. The Senate Governmental Affairs Committee held a hearing on S 803, a bill to establish a Federal Chief Information Officer within the Office of Management and Budget. See, prepared testimony of witnesses: Sean O'Keefe (OMB), Anne Altman (International Business Machines), Costis Toregas (Public Technology, Inc.), Aldona Valicenti (National Association of State Chief Information Officers), Greg Woods (Department of Education), Sharon Hogan (University of Illinois at Chicago), Barry Ingram (ITAA), Patricia McGinnis (Council for Excellence in Government), Joseph Wright (Terremark Worldwide). See also, testimony [PDF] of David McClure (GAO).
Senate Committee Holds Hearing on Online Privacy
7/11. The Senate Commerce Committee held a hearing on Internet privacy issues. See, opening statement [PDF] of Sen. Ernest Hollings (D-SC), the new Chairman of the Committee: "Clearly we need legislation that requires notice, affirmative consent, reasonable access, and reasonable security to protect individuals online." See also, opening statement [PDF] of Sen. John McCain (R-AZ), the ranking Republican. See also, prepared testimony in PDF of witnesses: Marc Rotenberg (EPIC), Fred Cate (Indiana University School of Law), Paul Schwartz (Brooklyn Law School), Paul Misener (Amazon), Hans Brondmo, Les Seagraves (Earthlink), Ira Rubinstein (Microsoft), Jason Catlett (Junkbusters).
House Subcommittee Approves TEACH Act
7/11. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property approved S 487, the Technology, Education, and Copyright Harmonization (TEACH) Act of 2001, unanimously and without amendment. Rep. Howard Coble (R-NC) and Rep. Howard Berman (D-CA) emphasized that the Senate bill was the product of a carefully negotiated compromise between educators, copyright holders, and others, and should not be amended. Rep. Rick Boucher (D-VA), who introduced a competing version of the bill, HR 2100, did not attend the mark up session.
This bill, which passed the Senate on June 7 by unanimous consent, extends the distance learning exemption to infringement contained in Section 110 of the Copyright Act to Internet technologies.
Rep. Zoe Lofgren (D-CA) had raised concerns at the Subcommittee's June 27 hearing about the anti circumvention provision of the bill. It requires that educational institutions "not engage in conduct that could reasonably be expected to interfere with technological measures used by copyright owners to prevent such retention or unauthorized further dissemination". At the July 11 mark up she stated that she would be satisfied by language in the committee report that clarifies that it is the intent of Congress not to limit the academic work of math professors, and that the conduct prohibited by the bill is "transmission specific."
House Subcommittee Approves HR 1992
7/11. The House Science Committee's Subcommittee on 21st Century Competitiveness amended and approved HR 1992, the "Internet Equity and Education Act of 2001," a bill to make it easier to obtain student loans for Internet based education, and other distance learning. The bill is sponsored by Rep. Johnny Isakson (R-GA).
The bill would remove the burden of the "12-hour rule" for non-traditional programs. This rule requires educational institutions to keep voluminous attendance records to demonstrate that their students attended certain types of work sessions. The bill also makes exceptions to the 50% requirement by allowing a limited number of institutions to offer more than 50 % of their courses by telecommunications, or to serve more than 50 % of their students through telecommunications courses. The bill also addresses incentive compensation provisions.
The Subcommittee approved an amendment in the nature of a substitute offered by Rep. Isakson, as amended by by an amendment offered by Rep. David Wu (D-OR). The Wu amendment requires the Education Department to prepare annual reports for the House and Senate on the effectiveness of the provisions of the bill. Rep. Patsy Mink (D-HI), the ranking Democrat on the Subcommittee, unsuccessfully opposed the bill. She argued that it would remove safeguards against fraud and abuse in the student loan program.
Lofgren Bill Would Ban Sending Unmarked E-Smut Spam to Kids
7/11. Rep. Zoe Lofgren (D-CA) introduced the "Protect Children from E-Smut Act of 2001", a bill to ban the sending of unmarked sexually explicit e-mail advertisements to children. It would make it a federal crime to create and/or forward unmarked sexually explicit material to a minor's e-mail account. It would also create a private right of action. The bill also would direct the National Institute of Standards and Technology (NIST) to help create a universal electronic mark that must be affixed to sexually explicit e-mails. Parents would then be able to set their children's e-mail service to block e-mails containing such a mark or designation. See, Lofgren release.
Sen. Edwards Introduces Location Privacy Bill
7/11. Sen. John Edwards (D-NC) introduced S 1164, the Location Privacy Protection Act of 2001. The bill was referred to the Senate Commerce Committee, of which Sen. Edwards is a member. Sen. Edwards stated in the Senate that under this bill, "any company that monitors consumers' physical location will be prohibited from using or disclosing that information without express permission from the consumer. And third parties that gain access to the information cannot use or disclose it without the individual's permission first." He continued that "Our cell phones, pagers, cars, palm pilots and other devices will enable companies to constantly track where we go and how often we go there. ... But these new technologies also raise serious privacy issues. Location information is very private, sensitive information that can be misused to harass consumers with unwanted solicitations or to draw inaccurate or embarrassing inferences about them. And in extreme cases, improper disclosure of location information to a domestic abuser or stalker could place a person in physical danger."
See also, HR 260, the Wireless Privacy Protection Act of 2001, introduced in the House on January 30, 2001, by Rep. Rodney Frelinghuysen (R-NJ).
Microsoft Announces Changes Following Court Ruling
7/11. Microsoft announced that it "is offering computer manufacturers greater flexibility in configuring desktop versions of the Microsoft Windows operating system in light of the recent ruling by the U.S. Court of Appeals for the District of Columbia." In particular, Microsoft stated that OEMs will be able "to remove the Start menu entries and icons that provide end users with access to the Internet Explorer components of the operating system". Microsoft also stated that is will also allow OEMs to put "icons directly onto the Windows desktop." Finally, Microsoft stated that "Consumers will be able to use the Add-Remove Programs feature in Windows XP to remove end-user access to the Internet Explorer components of the operating system." See, Microsoft release.
FCC Delays Spectrum Auction
7/11. The FCC's Wireless Telecommunications Bureau announced that the auction of licenses in the 747-762 and 777-792 MHz bands (Auction No. 31), previously scheduled to begin on September 12, 2001, have been delayed to an unspecified date.
Tom Wheeler, P/CEO of the Cellular Telecommunications & Internet Association, praised the postponement. He stated that "Today’s decision by the Wireless Bureau was a good one for the wireless industry, the U.S. Treasury, and most importantly, for wireless consumers. While the industry indeed faces a spectrum shortage, this delay reflects the facts on the ground: no one today can predict how or when this spectrum will be available or how it will fit into a national, long-term spectrum policy. Until other, related proceedings are concluded, this spectrum’s full potential value cannot be realized. This delay will allow government and industry to review their long-term spectrum needs, give greater clarity to the spectrum allocation process and ensure this spectrum earns its market value." See, CTIA release.
House Holds Hearing on Export Administration Act
7/11. The House International Relations Committee held its third hearing on S 149, The Export Administration Act. The Senate Banking Committee approved the bill on March 22. It would ease restraints on the export of most dual use products, such as computers and software.
See, opening statement of Rep. Henry Hyde (R-IL), Chairman of the Committee. See also, prepared testimony of witnesses: John Bolton (Under Secretary for Arms Control and International Security, Department of State), David Tarbell (Deputy Under Secretary of Defense for Technology Security Policy) , Stephen Bryen (Jefferson Partners) and Larry Christensen (Vastera).
7/11. Nine people joined the San Francisco area offices of the law firm of Perkins Coie in its patent prosecution practice. The firm acquired the Iota Pi Law Group of Palo Alto. Peter Dehlinger, head of the Iota Pi Law Group, joined Perkins Coie as a partner. Linda Judge joined as an associate. Four registered Patent Agents, Judy Mohr, LeeAnn Gorthey, Larry Thrower, and Jacqueline Mahoney, also joined. Mohr and Thrower also are enrolled in law school. Perkins Coie also hired three patent prosecution associates, Barbara Courtney, Richard Gregory, and Michael Martensen, who previously worked for the law firm of Wilson Sonsini. See, release.
More News
7/11. President Bush issued a Memorandum for the Heads of Executive Departments and Agencies regarding government reform. It states, among other things, that "Each agency head shall designate a Chief Operating Officer ... [who] shall report directly to the agency head and shall ... advance e-government, apply information policy and technology policies ..."
7/11. The House Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection held a hearing titled "The Potential for Discrimination in Health Insurance Based on Predictive Genetic Tests."
7/11. The U.S. Court of Appeals (5thCir) issued its opinion in USA v. Hill. Defendant, Hill, used an AOL account to send image files containing child pormography to 108 recipients, including an undercover law enforcement officer. He was charged with, plead guilty to, and sentenced for two counts of distributing child pormography and two counts of receiving child pormography, in violation of 18 U.S.C. §§ 2252(a)(2) and 2252(b)(1). The appeal only concerned sentencing issues. Affirmed.
7/11. Rep. Jim Turner (D-TX) and others introduced HR 2458, a bill to enhance the management and promotion of electronic government services and processes by establishing a Federal Chief Information Officer within the Office of Management and Budget.

Go to News Briefs from July 6-10, 2001.