News Briefs from July 21-25, 2001

Export Administration Act News
7/25. The House International Relations Committee approved HR 2602 by a voice vote. This bill, which is sponsored by Rep. Henry Hyde (R-IL), would extend the Export Administration Act (EAA) until November 20, 2001. It is currently set to expire in August. The Senate Banking Committee passed S 149 on March 22, 2001. That bill would extend the EAA and ease restraints on the export of most dual use products, such as computers and software. There are several variations of this bill pending in the House, including HR 2568 (Dreier), HR 2581 (Gilman), and HR 2557 (Menendez).
7/24. Sen. Tom Daschle (D-SD), the Senate Majority Leader, briefly addressed the EAA on the Senate floor. He stated that "the Export Administration Act is also in peril. The act expires during the August recess. The administration has indicated this is a high priority for them. It is a high priority for our caucus, but I think, on a bipartisan basis, Senators on both sides of the aisle have indicated a strong desire not to allow this legislation to expire in August. So it is my expectation that it, too, must be dealt with prior to the time we leave." See, Congressional Record, July 24, at Page S8102.
Rep. DeLauro Attacks PR China's Record on Intellectual Property
7/25. Rep. Rosa DeLauro (D-CT) addressed trade with China in the House. She stated that "China has engaged in unfair trade practices, pirated intellectual property, spread weapons and dangerous technology to rogue nations, suppressed democracy, denied its citizens religious freedom, and engaged in human rights abuses." She continued that "The United States should use our trade laws with China to pressure for greater access for American companies and goods. I oppose NTR for China because we need to let China know that more of the same is not acceptable. It is vital that we insist on fair and equal standards in compliance with all aspects of our trade laws. Until this happens, I cannot support NTR."
Wiretapping Legislation
7/25. Sen. Orrin Hatch (R-UT), Sen. Charles Schumer (D-NY), and Sen. Mike DeWine (R-OH), introduced S 1234, a bill to provide that certain sexual crimes against children are predicate crimes for the interception of communications. The bill was referred to the Senate Judiciary Committee.
Sen. Hatch said in the Senate that "The Anti-Sexual Predator Act of 2001 will add three predicate offenses to the Federal wiretap statute. This addition will enable law enforcement to intercept wire and oral communications relating to child pornography materials, the coercion and enticement of individuals to travel interstate to engage in sexual activity, the transportation of minors for the purpose of engaging in sexual activity." He elaborated that "Although in many cases much of the initial relationship between these sexual predators and their child victims takes place online, the predators will ultimately seek to have personal contact with the child. Thus, the communications will move first to the telephone, and then to face to face meetings. .. As the laws stand today, investigators do not have access to the Federal wiretap statutes to investigate these predators."
See also, HR 1877, the Child Sex Crimes Wiretapping Act of 2001, introduced by Rep. Nancy Johnson (R-CT) and others on May 16. HR 1877 was marked up by the House Crime Subcommittee on June 21.
7th Circuit Rules in Trade Secrets Case
7/25. The U.S. Court of Appeals (7thCir) issued its opinion in 3M v. Accu-Tech Plastics, a case involving misappropriation of trade secrets by former employees of 3M.
Facts. 3M makes carrier tape. Three employees of 3M who were integral to 3M's development of carrier tape manufacturing clandestinely formed their own company, Accu-Tech Plastics, to manufacture and market resin sheeting, the essential component of carrier tape. When 3M learned of Accu-Tech, it terminated the individuals, and filed a complaint in U.S. District Court (WDWisc) against Accu-Tech and the three former employees.
Complaint. The complaint alleged, as to the three individual defendants, breach of fiduciary duty, breach of employment contracts, and misappropriation of trade secrets. The complaint also alleged, as to Accu-Tech, misappropriation of trade secrets, unfair competition, tortious interference with prospective contractual relationships, and tortious inducement to breach his employment contract with 3M.
Trial Court. The jury found that Accu-Tech had misappropriated trade secrets from 3M, and that Accu-Tech's founders had breached duties of loyalty owed to 3M. The District Court overturned some of the jury's findings of liability, upheld other findings, and granted 3M's request for a permanent injunction barring the disclosure, but not the use, of the trade secrets which the jury found Accu-Tech had misappropriated.
Appeals Court. Both sides appealed. The Appeals Court affirmed the District Court on all matters, except that it reversed and remanded the District Court's grant of summary judgment to Accu-Tech on 3M's claim for unlawful competition.
Sen. Baucus Makes Trade Promotion Authority Proposal
7/25. Sen. Max Baucus (D-MT) released a proposal for extending trade promotion authority (also known as "fast track") to the President. He released a summary [PDF] and a statement [PDF]; however, he has not yet introduced a bill. Sen. Baucus proposes a two year grant of authority, with the possibility of extension for an additional three years. And, he includes labor and environment provisions.
Sen. Baucus is the new Chairman of the Senate Finance Committee, which has jurisdiction over this legislation. He stated that "There has been a great deal of discussion of how to develop a realistic, bipartisan approach to fast track. But there has been very little serious work. The Administration misses few opportunities to call upon the Congress to grant fast track. But it has yet to table a serious proposal or bill to achieve that goal. Some of my colleagues in the House have introduced a fast track bill. But it is a bill that completely ignores the most controversial issue of the day – the appropriate handling of labor rights and environmental issues. No one has put forward a truly bipartisan proposal on fast track extension."
Labor and Environment. Sen. Baucus proposes "achieving agreements from countries not weaken their labor or environmental laws to distort trade; provisions to support existing labor rights and environmental norms; and flexible enforcement procedure that allows the President to select from a range of options, including trade sanctions, fines, incentives, or other measures appropriate to the circumstances."
IPR. Sen. Baucus also proposes to "Continue to pursue efforts to protect intellectual property rights, taking into account the need for special rules that may need to apply to health emergencies."
E-Commerce. Sen. Baucus proposes to "Promote the liberalization of services essential to e-commerce, including telecommunications, computer related services, advertising and business services, distribution services (including the distribution of digitized content), information technology services, and financial services, including internet payments", "Seek the protection of intellectual property both online and offline, including stronger enforcement", and "Seek to eliminate all trade barriers to digitized trade, especially the online delivery of digitized content (including movies, music, software and publications)."
Other Bills. There are already several pending bills to extend trade promotion authority to the President. Sen. Bob Graham (D-FL), Sen. Frank Murkowski (R-AK), and others introduced, S 1104, the Trade Promotion Act of 2001. See also, S 599. On the House side, Rep. Phil Crane (R-IL) has introduced HR 2149.
Senate Holds Hearing On Cybercrime and NIPC
7/25. The Senate Judiciary Committee's Technology, Terrorism, and Government Information Subcommittee held a hearing on the National Infrastructure Protection Center (NIPC) and cybercrime. The NIPC, which is a part of the FBI, was created by Presidential Decision Directive (PDD) 63 in May of 1998 as a part of the federal government's strategy to protect national infrastructures from hostile attacks, especially computer based attacks.
Robert Dacey, of the Congress's General Accounting Office (GAO), testified regarding a GAO study of the NIPC. He concluded in his prepared testimony that "we found that progress in developing the analysis, warning, and information sharing capabilities called for in PDD 63 has been mixed. The NIPC has initiated a variety of critical infrastructure protection efforts that have laid a foundation for future government wide efforts. In addition, it has provided valuable support and coordination related to investigating and otherwise responding to attacks on computers. However, at the close of our review in February 2001, the analytical and information sharing capabilities that PDD 63 asserts are needed to protect the nation's critical infrastructures had not yet been achieved, and the NIPC had developed only limited warning capabilities."
See, prepared testimony of witnesses: Ron Dick (NIPC), Robert Dacey (GAO), Sallie McDonald (General Services Administration), James Savage (Secret Service), Michehl Gent (North American Electric Reliability Council), and Christopher Klaus (Internet Security Systems).
FCC Approves Fox Chris Craft Transfers
7/25. The FCC approved the application of Fox Television Stations to acquire licenses of 10 TV stations held by Chris-Craft Industries and its subsidiaries BHC Communications and United Television. The FCC approved the license transfers with conditions requiring the licensee to comply with FCC rules on television duopolies, the 35% national television audience cap, and newspaper / broadcast cross ownership. See, FTC release.
7/25. Alan Mendelson and Ora Fisher were appointed Co-Chairs of Venture and Technology Practice Group at the law firm of Latham & Watkins. Mendelson replaces Ted Sonnenschein, who will joining Coastview Capital, a venture capital firm focusing on life science investments. Sonnenschein will remain of Counsel to the firm. See, LW release.
More News
7/25. Verizon notified the Rhode Island Public Utilities Commission that it intends to file a Section 271 application with the FCC to provide interLATA services in Rhode Island. See, Verizon release.
7/25. The FCC published a notice in the Federal Register of its most recent postponement of auctions for spectrum licenses licenses in the 747-762 and 777-792 MHz band (Auction No. 31). These had been scheduled to begin on September 12, 2001. See, Federal Register, July 25, 2001, Vol. 66, No. 143, at Pages 38704 - 38705.
7/25. The NCTA filed a supplemental brief [PDF] with the Supreme Court of the United States in NCTA v. Gulf Power Company, the pole attachments case.
7/25. The Senate Judiciary Committee issued its Report No. 107-46 on S 407, the Madrid Protocol Implementation Act. This bill amends the Trademark Act of 1946 to provide for the registration and protection of trademarks used in commerce, in order to carry out provisions of certain international conventions.
Senate Judiciary Committee to Hold Hearings on Microsoft
7/24. Sen. Patrick Leahy (D-VT), Chairman of the Senate Judiciary Committee, announced that his committee will hold hearings "beginning in September, on competition and innovation involving advanced computer and Internet technologies, to ensure the broadest possible consumer choices." The hearings will examine "network effects, licensing issues, exclusive contracting, convergence, access to digital content and other topics." See, Leahy release.
Sen. Leahy's release continued that the hearings will examine "instant messaging, digital photography, voice recognition, audio and video programming and editing, Web services, calendar management, navigation devices, data storage, Internet auctions, financial services, security, consumer privacy, and integration of new features".
The release also states that the hearings will address Internet related antitrust issues, including "portals to the Internet, high-speed Internet access, server markets, database and online technology in operating systems, networking effects, and access to services and consumers."
The Senate Judiciary Committee has jurisdiction over antitrust issues. Former Chairman Orrin Hatch (R-UT) also held a hearing on Microsoft on July 23, 1998. See, links to testimony.
Sen. Schumer Pressures Microsoft and DOJ on Windows XP
7/24. Sen. Charles Schumer (D-NY), who is also a member of the Senate Judiciary Committee, wrote a letter to Microsoft CEO Steve Ballmer regarding Windows XP and antitrust issues. He stated that he has defended Microsoft in the past, but that Microsoft is now loosing his support, because features of the soon to be released Windows XP operating system will harm two New York companies, Kodak and AOL Time Warner.
Kodak digital imaging software. He elaborated that "Windows XP throws up roadblocks for customers seeking to use Kodak's digital imaging software. All customers, even those who specifically install the Kodak software application, are presented with the Microsoft application, 'Scanner & Camera Wizard,' meaning additional steps are necessary for those consumers to access the Kodak software." Kodak is based in Rochester, New York. Sen. Schumer also wrote that "it would seem that Windows XP's license for digital photography may violate the D.C. Circuit Court's ruling, as Microsoft is preventing PC manufacturers from removing or replacing 'Scanner & Camera Wizard' with a competitor's application."
AOL Time Warner. Sen. Schumer also wrote than AOL Time Warner will be harmed by Microsoft's plans to bundle Windows Media Player 8.0 with Windows XP. He explained that "Windows XP will prevent PC manufacturers from removing or replacing the Windows Media Player with competitive alternatives, in seeming violation of the D.C. Circuit Court's recent ruling. In doing so, Windows XP is poised to extinguish Real Player or any other alternative music player in the same manner as it did Netscape."
Sen. Schumer concluded that "It appears to me that Microsoft intends to maximize its monopolistic power, using XP as a platform to enter new lines of business while encumbering competitors. It also appears that Windows XP will limit the ability of PC manufacturers to offer consumers a choice of products and services. In my opinion, Microsoft should be held to the same standard as other natural monopolies, like the cable industry -- Microsoft's operating system should be a gateway to the Internet, not a gatekeeper. Without open access, the fundamental principles of a free market are violated, innovation is stifled, and consumer welfare is harmed." He asked Microsoft to make changes to its Windows XP. If not, "regulators should closely scrutinize the antitrust implications of the release of Windows XP and should consider enjoining its release" and "the Senate Judiciary Committee should hold public hearings".
Sen. Schumer also wrote a letter to Charles James, Assistant Attorney General for the Antitrust Division, urging him to expand his "ongoing settlement negotiations with Microsoft to include negotiations over Windows XP".
House Telecom Subcommittee Holds Hearing on 3G Spectrum
7/24. The House Commerce Committee's Telecommunications and Internet Subcommittee held a hearing titled "U.S. Deployment of Third Generation Wireless Services: When Will It Happen and Where Will It Happen?" 3G is intended to bring broadband wireless Internet access and other communications services to mobile devices, including laptops, cell phones and PDAs. Locating spectrum for 3G systems is proving difficult for the agencies responsible for spectrum management -- the FCC and NTIA. Congress may soon seek a legislative solution.
The U.S. does not have very much unused spectrum to allot for 3G systems. Hence, spectrum currently allotted to the private sector or government entities for other purposes will have to be reallocated or shared. Incumbent users are steadfastly opposed to reallocation or sharing of spectrum that they currently use. Efforts by the Clinton administration, the FCC and NTIA have produced meetings, reports and studies, but little progress.
To date, three spectrum bands have been identified for possible use for 3G systems: 698 to 960 MHz, 1710 to 1885 MHz, and 2500 to 2690 MHz. Part of the 1710 to 1885 MHz band is currently being used by federal agencies, especially by the Department of Defense. The National Telecommunications and Information Administration (NTIA), which is a part of the Department of Commerce, has responsibilities regarding spectrum management for spectrum used by government entities. This includes the 1755 to 1850 MHz band. The FCC has spectrum management responsibilities for spectrum used by the private sector. This includes the 2500 to 2690 MHz band, which is currently being used for MMDS, MDS, and ITFS.
Monsignor Michael Dempsey, of the Catholic Television Network, which a major ITFS licensee of spectrum from the FCC, testified that the spectrum being used by the Catholic church for educational and other purposes is "not a viable choice" for reallocation for 3G systems, and Congress should "take it off the table." No member of the subcommittee debated this point with the Monsignor. Similarly, Linton Wells, of the Defense Department, testified that spectrum used by the Defense Department could not be reallocated without jeopardizing national security.
See, prepared testimony of witnesses: Michael Dempsey (Catholic Television Network), Linton Wells (Department of Defense), William Hatch (Commerce Dept.), Julius Knapp (FCC Office of Engineering and Tech.), Denny Strigl (Verizon Wireless), and Thomas Wheeler (CTIA).
Rep. Chip Pickering (R-MS) stated that he would likely introduce legislation to establish a process for reallocating spectrum for 3G services. He suggested that proceeds from the auction of spectrum currently being used by the military should go back to the military to fund the relocation process. However, Rep. Ed Markey (D-MA) stated that auction proceeds should be used for education, teacher training, and closing "the digital divide." Rep. Fred Upton (R-MI), the subcommittee Chairman, stated that he expected Rep. Pickering to introduce his bill after the August recess, and the subcommittee to hold a legislative hearing this fall.
Members of the subcommittee also used the hearing to discuss other spectrum issues. Rep. Karen McCarthy (D-MO) and Rep. Bobby Rush (D-IL) pressured witnesses to move more rapidly on deploying emergency 911 capabilities, including caller location. Rep. Clifford Stearns (R-FL) and others advocated lifting the current spectrum ownership caps.
Rep. Upton presided throughout the hearing. See, opening statement. Rep. Billy Tauzin (R-LA), the Chairman of the full committee, was not present, but submitted a statement for the record. 21 of the subcommittee's members participated in at least part of the hearing.
House Holds Hearing on Internet Gambling Bills
7/24. The House Financial Services Committee's Financial Institutions Subcommittee held a hearing on HR 556, the Unlawful Internet Gambling Funding Prohibition Act, and other bills pertaining to Internet gambling. See, opening statement [PDF] of Rep. Michael Oxley (R-OH), Chairman of the full committee, and opening statement [PDF] of Rep. Spencer Bachus (R-AL), Chairman of the subcommittee. See also, prepared statements in PDF of witnesses: Michael Farmer (Wachovia Bank Card Services), Bob Frederick (NCAA), Mark VanNorman (National Indian Gaming Association), Edwin McGuinn (E-Lottery), and Timothy Kelly (National Gambling Impact Study Commission).
HR 556, which is sponsored by Rep. Jim Leach (R-IA), and HR 2579, the Internet Gambling Payments Prohibition Act, which is sponsored by Rep. John LaFalce (D-NY), both attempt to stop illegal gambling over the Internet by prohibiting the use of certain financial instruments, including credit extended via a credit card, electronic fund transfers, and checks. The House Finance Committee has jurisdiction over these instruments.
In addition, Rep. Jon Kyl (R-AZ) and Rep. Bob Goodlatte (R-VA) sponsored bills in the 105th and 106th Congresses that would ban some Internet gambling activities, and rely upon criminal prosecutions and actions by interactive computer service providers for enforcement. See, S 692 (106th) and HR 3125 (106th). Neither Kyl nor Goodlatte have reintroduced legislation in the current (107th) Congress. However, Rep. Goodlatte has stated that he may introduce a bill next week. The Judiciary Committees have jurisdiction over crime bills. Both Kyl and Goodlatte are members of these committees.
Reps. Shimkus and Markey Seek a .kids Domain
7/24. Rep. John Shimkus (R-IL) and Rep. Ed Markey (D-MA) held a press conference to promote HR 2417, the Dot Kids Domain Name Act of 2001, which they introduced on June 28. The bill would require the National Telecommunications and Information Administration (NTIA), which is a part of the U.S. Department of Commerce, to exercise its authority under its Memorandum of Understanding with the ICANN to work with ICANN to create a child friendly top level domain (TLD).
Rep. Shimkus stated in a release that "I introduced this bill to bring about the long talked about idea of creating safe haven for children on the World Wide Web where positive content is promoted. The Internet Corporation for Assigned Names and Numbers (ICANN) had the perfect opportunity to do create a safe zone for children in the last round of Top Level Domain Names (TLDs) selection, but failed to do so. Since ICANN has shown no interest in helping to achieve this goal, Congress must act."
Rep. Markey stated that "Rather than trying to send problematic material for children into a specific area, such as 'dot adult' ... the cyberspace zoning equivalent of an online 'red light district,' this legislation creates an Internet playground, a top level domain that is kids friendly from the start." See, Markey statement.
The bill provides that "... the Secretary of Commerce, acting through the National Telecommunications and Information Administration, shall (1) pursuant to the authority under section II.B. of the Memorandum of Understanding Between the U.S. Department of Commerce and the Internet Corporation for Assigned Names and Numbers, ... jointly with ICANN, develop a plan ... for ICANN to establish the new domain ..." The bill continues that "The new domain shall be established as a top-level, International domain having a domain name appropriate for its purpose" and "shall be available for voluntary use as a location only of material that is considered suitable for minors and shall not be available for use as a location of any material that is harmful to minors."
V-Chip Debate
7/24. The Kaiser Family Foundation (KFF) announced that it conducted a public opinion poll on the V-Chip. It found that 40% of American parents now own a TV equipped with a V-Chip. However, only 17% of parents who own a V-Chip – or 7% of all parents – are using it to block programs with sexual or violent content. See, KFF release.
7/25. Rep. Clifford Stearns (R-FL) spoke in the House about the KFF report. He stated that "Some of my colleagues are quick to rely on government as a panacea for all of our problems. Yesterday's report reveals that the long arm of government regulation is no substitute for good parenting."
Rep. Paul Introduces Privacy Bill to Ban Certain Medical Databases
7/24. Rep. Ron Paul (R-TX) and others introduced HR 2615, the Patient Privacy Act of 2001. The bill provides that, subject to certain enumerated exceptions, "no Federal funds may be spent to develop or implement any database or other system of records containing personal medical information of any United States citizen, or to collect medical records for the purpose of storing them in a database or other system of records." The bill was referred to the House Ways and Means Committee.
House Judiciary Committee Approves USPTO Authorization Bill
7/24. The House Judiciary Committee amended and reported HR 2047, the Patent and Trademark Office Authorization Act of 2002. The bill provides that "There are authorized to be appropriated to the United States Patent and Trademark Office for salaries and necessary expenses for fiscal year 2002 an amount equal to the fees collected in fiscal year 2002 ..." The committee adopted two minor technical amendments, and the bill as amended, without debate, by unanimous voice votes.
The USPTO is funded entirely out of fees collected from users. However, for several years the appropriations committees have been diverting some of these fees to subsidize other government programs. This practice is opposed by intellectual property owners, high tech companies, and members of the House Subcommittee on Courts, the Internet, and Intellectual Property. This authorization bill does not provide for diversion of user fees.
House Holds Hearing on Counterfeit Currency
7/24. The House Financial Services Committee's Domestic and Monetary Policy, Technology and Economic Growth Subcommittee held a hearing on the security and design of currency. Daniel Snow of the Counterfeit Division of the U.S. Secret Service stated in his prepared testimony [PDF] that "With reprographic equipment, computers, and computer software continuing to become more sophisticated and affordable, counterfeiters have been able to increase both the volume and the quality of their product. ... In response to this growing problem, the Secret Service is pursuing legislative changes to counterfeiting statutes that clearly define the fraudulent use of digital images as a violation of law." See also, prepared statement [PDF] of Rep. Mike Oxley (R-OH), Chairman of the full committee.
McAfee Granted Patent Related to Selling Software over the Internet
7/24. The USPTO granted U.S. Patent No. 6,266,774 to McAfee titled "Method and system for securing, managing or optimizing a personal computer." It discloses a "system, method, and computer program product for delivery and automatic execution of security, management, or optimization software over an Internet connection to a user computer responsive to a user request entered via a web browser on the user computer."
McAfee P/CEO Srivats Sampath said in a release on August 6 that "this patent further reinforces our belief that the future lies in software applications being delivered online as web services to users around the world. This patent also reinforces our first mover advantage by securing our foothold in this space." Sampath and others are the inventors; McAfee is the assignee of the patent.
New Bills
7/24. Rep. Henry Hyde (R-IL) and others introduced HR 2602, a bill to extend the Export Administration Act until November 20, 2001.
7/24. Rep. Bill Thomas (R-CA) introduced HR 2603, a bill to implement the agreement establishing a U.S. Jordan free trade area.
7/24. Rep. Mitch McConnell (R-KY) introduced S 1232, a bill to provide for the effective punishment of online child molesters, by removing the requirement of interstate travel.
People and Appointments
7/24. Napster announced that Konrad Hilbers has replaced Hank Barry as CEO. See, Napster release.
7/24. The Senate Banking Committee unanimously approved the nomination of Harvey Pitt to be Chairman of the Securities and Exchange Commission (SEC). See, release.
7/24. Thomas Navin was named a Deputy Chief of the FCC's Wireless Telecommunications Bureau's Policy Division. Navin was previously an Attorney Advisor in the Common Carrier Bureau's Policy and Program Planning Division. He was the team leader on SBC's Missouri Section 271 application. Navin previously worked as an associate in the law office of McDermott Will & Emery in its regulatory practice group.
More News
7/24. The Office of Science and Technology Policy (OSTP) and the National Security Council (NSC) published a notice of proposed rule making in the Federal Register regarding removing their regulation on Emergency Restoration Priority Procedures for Telecommunications Services. Comments are due by August 20, 2001. See, July 24, 2001, Vol. 66, No. 142, at Pages 38411 - 38412.
7/24. The U.S. Court of Appeals (FedCir) issued its opinion in In Re Roemer, a patent interference case involving to U.S. Patent No. 4,737,716, which pertains to nuclear magnetic resonance imaging. The Court of Appeals reversed in part, vacated in part, and remanded.
Adobe Advocates Release of eBook Cracker
7/23. Adobe recommended the release of Dmitry Sklyarov from jail. The U.S. Attorney's Office (NDCal) charged Dmitry Sklyarov by criminal complaint [PDF] with one count of trafficking in a product designed to circumvent copyright protection measures in violation of the Digital Millennium Copyright Act (DMCA). See, 17 U.S.C. § 1201. The complaint states that Sklyarov developed for sale and distribution a program that can convert Adobe's eBooks into naked files that can be read, copied, and stored on any computer.
Colleen Pouliot, SVP and General Counsel for Adobe, said in a release that "the prosecution of this individual in this particular case is not conducive to the best interests of any of the parties involved or the industry. ElcomSoft's Advanced eBook Processor software is no longer available in the United States, and from that perspective the DMCA worked. Adobe will continue to protect its copyright interests and those of its customers."
Bill Would Create Telework Tax Credits
7/23. Rep. Scott McGinnis (R-CO) and others introduced HR 2597, the Broadband Deployment and Telework Incentive Act of 2001. The bill would amend the Internal Revenue Code to provide an employer telework tax credit, and a telework equipment tax credit. The bill was referred to the House Ways and Means Committee.
Employer Telework Tax Credit. The bill provides that "the employer telework tax credit for any taxable year is equal to $500 for each employee who participates in an employer sponsored telework arrangement during the taxable year."
Telework Equipment Tax Credit. The bill provides that the "telework equipment tax credit for any taxable year is equal to 10% of qualified telework expenses paid or incurred during the taxable year by either the employer on behalf of the employee, or directly by the employee, pursuant to an employer sponsored telework arrangement."
To qualify, the employee must "telework for a minimum of 25 days per taxable year." Qualified expenses include "expenses paid or incurred for computers, computer- related hardware and software, modems, data processing equipment, telecommunications equipment, and access to Internet or broadband technologies, including applicable taxes and other expenses for the delivery, installation, or maintenance of such equipment." Finally, telework is defined as "work functions at locations other than the traditional work place of the employer thereby eliminating or substantially reducing the physical commute to and from that traditional work place."
Copyright Office to Hold Arbitration Proceeding on Webcasting Rates and Terms
7/23. The Copyright Office (CO) published a notice of initiation of arbitration proceeding in the Federal Register regarding webcasting of digital sound recordings. The notice states that the CO "is announcing the initiation of and schedule for the 180-day arbitration period to set the rates and terms for two compulsory licenses. One license allows certain eligible nonsubscription services to perform sound recordings publicly by means of digital audio transmissions and the other allows a transmitting organization to make an ephemeral recording of a sound recording for the purpose of making a permitted public performance." The proceedings will begin with opening statements on July 30, 2001. Presentation of direct cases is scheduled for July 31 through September 13. See, Federal Register, July 23, 2001, Vol. 66, No. 141, at Pages 38324 - 38326.
Copyright Office Issues NPRM
7/23. The Copyright Office (CO) published a notice of proposed rule making in the Federal Register regarding rates and terms for the digital performance of sound recordings. The CO requests comment on proposed regulations that will govern the RIAA collective when it functions as the designated agent receiving royalty payments and statements of accounts from nonexempt, subscription digital transmission services which make digital transmissions of sound recordings under the provisions of Section 114 of the Copyright Act. Comments are due by August 22, 2001. See, Federal Register, July 23, 2001, Vol. 66, No. 141, at Pages 38226 - 38229.
House Passes DOJ Appropriations Authorization Bill
7/23. The House passed HR 2215, the 21st Century Department of Justice Appropriations Authorization Act, by a voice vote. The bill authorizes $3,507,109,000 for the FBI and $140,973,000 for the Antitrust Division. It also requires the DOJ to report to the Congress on its use of Carnivore, and to appoint a Deputy Inspector General to oversee the troubled FBI.
Carnivore. The bill provides, at Section 306, that the DOJ must provide detailed reports to the Congress regarding its use of the Internet surveillance systems known as both "Carnivore" and "DCS 1000". The bill requires that for FY 2001 and FY 2002 "the Attorney General and the Director of the Federal Bureau of Investigation shall provide to the Judiciary Committees of the House of Representatives and Senate a report detailing -- (1) the number of times DCS 1000 was used for surveillance during the preceding fiscal year; (2) the Department of Justice official or officials who approved each use of DCS 1000; (3) the criteria used by the Department of Justice officials to review requests to use of DCS 1000; (4) a complete description of the process used to submit, review, and approve requests to use DCS 1000; (5) the specific statutory authority relied on to use DCS 1000; (6) the court that authorized each use of DCS 1000; (7) the number of orders, warrants, or subpoenas applied for, to authorize the use of DCS 1000; (8) the fact that the order, warrant, or subpoena was granted as applied for, was modified, or was denied; (9) the offense specified in the order, warrant, subpoena, or application; and (10) the nature of the facilities from which, or the place where the contents of, electronic communications were to be disclosed."
Inspector General. The bill also provides, at Section 304, in part, that "The Inspector General of the Department of Justice shall appoint a Deputy Inspector General for the Federal Bureau of Investigation who shall be responsible for supervising independent oversight of programs and operations of the Federal Bureau of Investigation until September 30, 2004." Rep. James Sensenbrenner (R-WI), Chairman of the House Judiciary Committee, stated in a release that "This position is necessary because of the recent spy scandal, the FBI's failure to comply with the document disclosure agreement in the McVeigh case, and now the revelation about missing firearms and computers at our nation's number one crime fighting agency. These problems cry out for attention, and I believe there needs to be one person at the IG's office whose sole focus is the review of FBI operations."
FEC Fines Tech PACs
7/23. The FEC fined the Nortel Networks PAC, Cable & Wireless PAC, and Circuit City PAC $1,000 each for failure to file reports pursuant to the Federal Election Campaign Act. See, FEC release.
People and Appointments
7/23. Charlene Barshefsky joined the law firm of Wilmer Cutler & Pickering. She was previously the U.S. Trade Representative. She will focus on global business, investment, regulatory, and negotiating advice. See, WCP release [PDF].
7/23. Robert Novick joined the law firm of Wilmer Cutler & Pickering as a partner in the Washington DC office. He was previously General Counsel in the Office of the USTR. See, WCP release [PDF].
7/23. Philip Beck joined the Antitrust Division of the Department of Justice. He will take over as lead trial counsel in the Microsoft antitrust case. He was previously a partner in the Chicago office of the law firm of Bartlit Beck. The DOJ release announcing his appointment also referenced the DOJ's "successful prosecution of the case to this point."
7/23. John Elwood joined the Criminal Division of the Department of Justice as Counselor to the Assistant Attorney General Michael Chertoff. He previously was a partner in the Washington DC office of the law firm of Baker Botts. See, BB release and bio.
G8 Communiqué
7/22. Leaders of eight major democratic nations and Russia issued a Communiqué at the conclusion of their summit meeting in Genoa, Italy. They agreed to promote free trade and a new round of multilateral negotiations. They wrote: "Open trade and investment drive global growth and poverty reduction. That is why we have agreed today to support the launch of an ambitious new Round of global trade negotiations with a balanced agenda." The statement also addresses in vague language protecting intellectual property rights and expanding the use of information technology.
Intellectual Property Rights. The Communiqué states that "Increased market access must be coupled with the capacity to take advantage of it. Thus, to help developing countries benefit from open markets, we will better co-ordinate our trade related assistance to: provide bilateral assistance on ... the protection of intellectual property rights ..." It also states that "To promote further investments in the knowledge- based economy, we call on the WTO and the World Intellectual Property Rights Organisation, in collaboration with the World Bank, to help the poorest countries comply with international rules on intellectual property rights."
Promoting Use of IT. The Communiqué states that "we will work to expand the use of information and communications technology (ICT) to train teachers in best practices and strengthen education strategies. We especially encourage the private sector to examine new opportunities for investment in infrastructure, ICT and learning materials. ... ICT holds tremendous potential for helping developing countries accelerate growth, raise standards of living and meet other development priorities. ... We also encourage development of an Action Plan on how e-Government can strengthen democracy and the rule of law by empowering citizens and making the provision of essential government services more efficient."

Go to News Briefs from July 16-20, 2001.