News Briefs from October 16-20, 2001

3rd Circuit Affirms in Check Point Trademark Case
10/19. The U.S. Court of Appeals (3rdCir) issued its opinion in Checkpoint Systems v. Check Point Software, a trademark case. Checkpoint Systems makes electronic security control systems that track the physical location of goods, including electronic article surveillance systems, access control systems, closed circuit television systems, and radio frequency identification devices. It registered the "CHECKPOINT" mark with the United States Trademark Office. Check Point Software Technologies makes firewall software products. Checkpoint Systems filed a complaint in U.S. District Court against Check Point Software Technologies alleging trademark infringement and unfair competition in violation of the Lanham Act. The District Court found no likelihood of confusion, and thus, held for the defendant on both counts. The Court of Appeals affirmed.
FCC Files Petition for Writ of Certioriari in NextWave Case
10/19. The Federal Communications Commission (FCC) filed a petition for writ of certiorari with the Supreme Court of the U.S. in the NextWave spectrum dispute. The FCC faced an October 19 deadline for filing.
NextWave obtained spectrum licenses at FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses, and make payments under an installment plan, thus creating a debtor creditor relationship between NextWave and the FCC. NextWave did not make payments required by the plan, and filed a Chapter 11 bankruptcy petition. The FCC cancelled the licenses. The U.S. Court of Appeals (DCCir) ruled in its June 22, 2001, opinion that the FCC is prevented from canceling the spectrum licenses by § 525 of the Bankruptcy Code.
The FCC now seeks review of this decision. It stated in its cert petition that the issue is "Whether Section 525 of the Bankruptcy Code, 11 U.S.C. 525, conflicts with and displaces the Federal Communications Commission’s rules for congressionally authorized spectrum auctions, which provide that wireless telecommunications licenses obtained at auction automatically cancel upon the winning bidder’s failure to make timely payments to fulfill its winning bid." The FCC elaborated that "the D.C. Circuit’s decision dramatically expands the reach of bankruptcy law into an area that Congress has traditionally reserved to the Commission ..."
NextWave bid $4.74 Billion in 1996 for the spectrum licenses at issue. The FCC recently re-auctioned the spectrum, receiving $15.85 Billion in bids. Various press accounts, citing anonymous sources, have stated in the last week that NextWave, the FCC, and the re-auction winner are close to a settlement. Also, FCC Chairman Powell has scheduled a press conference for Tuesday morning, October 23.
GAO Reports on Information Sharing and Cyber Attacks
10/19. The GAO released a report [PDF] titled "Information Sharing: Practices That Can Benefit Critical Infrastructure Protection."
GAO studied 11 organization to determine information sharing practices related to protection of critical information infrastructure. The organizations were The Agora, CDC, CERT/CC, Federal Computer Incident Response Center, International Information Integrity Institute, InfraGard, Joint Task Force -- Computer Network Operations, National Coordinating Center for Telecommunications, Network Security Information Exchanges, N.Y. Electronic Crimes Task Force, and the North American Electric Reliability Council.
The report states that "Information sharing and coordination are key elements in developing comprehensive and practical approaches to defending against computer based, or cyber, attacks, which could threaten the national welfare. Such attacks could severely disrupt computer supported operations, compromise the confidentiality of sensitive information, and diminish the integrity of critical data." The report continues that "The importance of sharing information and coordinating the response to cyber threats among various stakeholders has increased as our government and our nation have become ever more reliant on interconnected computer systems to support critical operations and infrastructures, such as telecommunications, power distribution, financial services, national defense, and critical government operations."
One of the challenges identified by the report is "overcoming new members’ initial reluctance to share information." The report elaborated that "All of the participating organizations told us that initially establishing trust among the original members was a challenge. This was because members were reluctant to share their organization’s problems and vulnerabilities with outsiders, some of whom were commercial competitors."
The report was prepared for Sen. Robert Bennett (R-UT). Sen. Bennett and Sen. Jon Kyl (R-AZ) are cosponsors of S 1456, the Critical Infrastructure Information Security Act of 2001. One of the main purposes of the bill is to encourage information sharing pertaining to cyber security issues, by removing legal disincentives for such actions. The bill would provide a Freedom of Information Act exemption for certain cyber security information provided to certain federal agencies, including the NIPC, FCC, Justice Department, Defense Department, and Commerce Department. The bill would also provide an antitrust exemption for certain collaboration on cyber security issues.
The report also concluded that "All of the organizations identified trust as the essential underlying element to successful relationships and said that trust could be built only over time and, primarily, through personal relationships." The report identified three "critical success factors": secure communication mechanisms, support of senior managers, and organization leadership continuity. The report also identified four "challenges": developing agreements on the use and protection of shared information, obtaining adequate funding, maintaining a focus on emerging issues, and maintaining professional and administrative staff with appropriate skills.
Macromedia Sues Adobe for Patent Infringement
10/19. Macromedia filed a complaint in U.S. District Court (NDCal) against Adobe Systems alleging patent infringement. Both Macromedia and Adobe make software products for creating and editing web pages and web sites. Macromedia's products include Dreamweaver, Dreamweaver UltraDev and Fireworks. Adobe makes GoLive. Macromedia alleges in its two count complaint that Adobe infringed two of its patents, U.S. Patent No. 5,845,299, titled "Draw-Based Editor for Web Pages", and U.S. Patent No. 5,911,145, titled "Hierarchical Structure Editor for Web Sites".
Macromedia seeks declarations that Adobe has infringed these two patents, preliminary and permanent injunctions against further infringement, compensatory damages, treble damages for willful infringement, interest and attorneys' fees.
Macromedia is represented by Darryl Woo of the law firm of Fenwick & West. The case was filed in the San Jose Division of the Northern District of California, and is numbered 01-03940 SI (Judge Susan Illston).
More News 10/19. A grand jury of the U.S. District Court (CDCal) returned an indictment against Peter Ebel charging production, transportation and possession of child pormography. The evidence was found by U.S. Customs on his PC and CDs when he arrived at Los Angeles International Airport on a flight from Eastern Europe. See, release.
Sen. Bennett Says SEC Should Require Cyber Security Disclosure
10/18. Sen. Robert Bennett (R-UT) stated that he is urging the new Securities and Exchange Commission (SEC) Chairman, Harvey Pitt, to adopt rules requiring covered companies to report on their preparations for cyber threats. Sen. Bennett stated that the purpose would be to incent companies to devote more resources to the threat, just as an earlier similar rule caused companies to engage in Y2K remediation efforts.
Sen. Bennett spoke on this matter at the Center for Strategic and International Studies' (CSIS) conference titled "Strengthening Homeland Cyberdefense". He said that a important part of the Y2K remediation effort was the SEC's rule requiring Y2K reporting. He related that the SEC "said we are going to require you to reveal on your reporting statements your level of Y2K preparedness. We will by fiat define that as a material item that has to be reported. And then the companies started to scramble, because when they have to deal with the SEC, it suddenly gets serious."
Sen. Bennett continued: "Now, I have talked to the new Chairman of the SEC about this aspect, because once again, the experience we have had with Y2K is that these were not sunk costs, on which there was no return on investment."
"I have had a number of companies come to me and say, 'You know, we really grumbled and hated you with respect to Y2K, but when we did all of the remediation, and looked at what a much better IT system we had than before we made the fixes, we said, we are going to get a significant return on this investment.' If you adopt the fail and fix notion with respect to cyber terrorism, you are going to have much higher costs overall, than if you go in to establish the security up front. We can get the SEC and other agencies to get people to understand that, we will go a long way towards changing the culture in American industry, and get the advantages that come out of the remediation activities," said Sen. Bennett.
Sen. Bennett also spoke with reporters after the event. He stated that he would like to see the SEC adopt rules, rather than have the Congress impose a mandate on the SEC through legislation. He added: "The conversations are still very preliminary, because Harvey Pitt is just beginning to get his feet under his desk, so we have not got anything specific going. But, I have had the conversation with him that this is an area where the SEC can be helpful. And he has agreed to talk to me about it. And, we probably won't see anything definitive out of them, maybe until sometime next year." He added, "I am going on the Y2K precedent, that it can be done with rulemaking. And, I will be in conversations with the folks at the SEC to see what would make sense and how far they can go."
Sen. Bennett Promotes Cyber Security Bill
10/18. Sen. Robert Bennett (R-UT) spoke in favor of S 1456, the Critical Infrastructure Information Security Act of 2001, a bill which he introduced, along with Sen. Jon Kyl (R-AZ). One of the main purposes of the bill is to encourage information sharing pertaining to cyber security issues, by removing legal disincentives for such actions. He spoke at the Center for Strategic and International Studies' (CSIS) conference titled "Strengthening Homeland Cyberdefense" in Washington DC.
The bill would provide a Freedom of Information Act exemption for certain cyber security information provided to certain federal agencies, including the NIPC, FCC, Justice Department, Defense Department, and Commerce Department. The bill would also provide an antitrust exemption for certain collaboration on cyber security issues.
FOIA Exemption. Sen. Bennett stated that "if information comes to the government for analysis, and then under the Freedom of Information Act, the government reveals that to the terrorists, that is really not too smart. So, what we are saying is that you can share this kind of information with the government, the Freedom of Information Act will not apply, and the government will do its analysis, and then share that analysis back."
"Now there are those who say to me: 'Oh! This is terrible. The Freedom of Information Act protects the public's right to know, and you have to prevent -- you are striking a blow against First Amendment, and freedom, and all of the rest of that, for the public's right to know,' said Sen. Bennett. "The fact is, if you do not put this kind of legislation in place, private industry will not tell the government. So, the public is not going to get this information to know either way. You are making absolutely no difference to the public's access to this information. You are making a significant difference to the analyst's right to this information."
Prospects for Passage. Sen. Bennett says that there is wide support for the bill, but there is dispute as to how it should be handled. He said: "Hell hath no fury like a Congressional chairman whose jurisdiction is challenged. And, the various chairmen of the various committees all say, 'Yes, this is a very important issue, and I will handle it.' " He continued that the Senate Majority Leader, "Sen. Daschle, is struggling with how he can deal with the various maharajas that preside over these Congressional committees. Everyone of whom, as I say, is willing to take on the issue, but not one of which is willing to give up any jurisdiction. And when everybody is in charge, that means that nobody is in charge. It has been interesting. The bill -- everybody likes my bill -- we can't find a home for it."
Funding for Cyber Security Programs
10/18. Harris Miller, President and CEO of the ITAA, gave a speech in which he advocated a $10 Billion federal cyber security program. He spoke at the Center for Strategic and International Studies' (CSIS) half day conference titled "Strengthening Homeland Cyberdefense" in Washington DC.
He stated that "strong steps to upgrade cyber security must be taken immediately. These efforts must be conducted as part of critical infrastructure protection for healthcare, utilities, transportation, telecommunications and other critical industries. To do otherwise could leave the nation vulnerable to cyber attacks. I personally think $10 billion in federal spending, grants and loans is needed to get the job done."
He continued that $2.5 Billion should be appropriated to upgrade federal government information systems. $3 Billion in grants should be provided to state and local governments and other public entities to upgrade information systems. $500 Million in grants should be made available to universities to provide more curriculum and training in information security. Finally, Miller argued that $4 Billion in loans should be provided to small and medium sized businesses to prepare for cyber attacks.
APEC Meeting Addresses E-Commerce
10/18. Representatives of the twenty-one nations participating in the Asia Pacific Economic Cooperation (APEC) conference Shanghai, China, issued a joint statement. The statement expressed "confidence in the immense potential of Information and Communications Technology (ICT) and its applications in upgrading the welfare and living standard of our people in the APEC region". The statement also addressed several specific issues, including e-commerce trade barriers, privacy, consumer protection, and closing digital divides.
Promoting E-Commerce. The statement "endorsed the proposal of the establishment of the APEC E-commerce Business Alliance. Ministers also welcomed the proposal to strengthen economic and technical cooperation in the area of E-commerce with a view to narrowing the gap between member economies in the application of E-commerce."
E-Commerce Trade Barriers. The statement " recognised the growth of global electronic commerce and the importance of a legal and policy framework which both ensures business and public confidence and avoids unnecessarily restrictive trade barriers while respecting national policy objectives in order to allow E-commerce to develop its full potential to create new opportunities for trade."
Online Privacy and Consumer Protection. The statement "welcomed the progress made by Electronic Commerce Steering Group (ECSG)". It also "endorsed the proposal by the ECSG to develop APEC guidelines for online consumer protection and noted the proposal to organize a public/ private sector forum regarding online privacy and E-commerce during 2002."
Digital Divides. The statement "reaffirmed commitments to triple access to the Internet by 2005, and to ensure that all groups within an economy have access individually or through community- based services to the Internet by 2010".
DOC Official Discusses Digital Divide
10/18. Deputy Secretary of Commerce Samuel Bodman gave an interview with CCTV in Shanghai, China, in which he addressed information technologies and digital divides. He stated that there "will be a series of individual projects, be they related to preventing the spread of infectious disease, to the very vital programs that APEC is sponsoring on e-commerce and on educating the citizens of this region about the opportunities made available by the Internet and by related information technology. Attacking this whole question of the digital divide such that the poorest person will have an opportunity to join in the Internet revolution, if you will, and have an opportunity to improve his or her life. And that's really what it's all about." See, transcript.
New WTO Round
10/18. Representatives of the twenty-one nations participating in the Asia Pacific Economic Cooperation (APEC) conference Shanghai, China, reaffirmed their support for a new round of WTO trade negotiations. See, joint statement.
10/18. Secretary of State Colin Powell gave a speech in Shanghai, China, in which he told his audience to "keep investing, keep opening up avenues of opportunities for increased trade, keep destroying barriers, let's move quickly. We want to see China and Taiwan enter the World Trade Organization. We need to see the next round get started or launched; we need to keep moving forward, we need to restore confidence in the world's economies ..."
Net Tax Moratorium Set to Expire This Weekend
10/18. The Senate adjourned until Tuesday, October 23, without passing legislation to extend the existing moratorium on Internet access taxes, and multiple and discriminatory taxes on Internet commerce. The House passed HR 1552, the Internet Non-Discrimination Act, by a unanimous voice vote on October 16, extending the moratorium for two years.
Section 1101(a) of the Internet Tax Freedom Act, which was enacted in late 1998, provides that "No State or political subdivision thereof shall impose any of the following taxes during the period beginning on October 1, 1998, and ending 3 years after the date of the enactment of this Act ... (1) taxes on Internet access, unless such tax was generally imposed and actually enforced prior to October 1, 1998 ... (2) multiple or discriminatory taxes on electronic commerce." This moratorium expires on October 21.
As a consequence of the Senate's inaction, states will be free to impose new Internet access taxes or multiple or discriminatory taxes on e-commerce next week.
Fifth Circuit Construes Innocent Infringer Defense
10/18. The U.S. Court of Appeals (5thCir) issued its opinion in Dial One v. BellSouth, a case involving the innocent infringer defense in trademark actions. Plaintiff Dial One is a franchise holder. Two other plaintiffs are franchisees. BellSouth and other defendants published yellow pages and white pages directories that listed as a franchisee an entity that was not in fact a franchisee. Plaintiffs filed a complaint in U.S. District Court (EDLa) against BellSouth and others alleging infringement of the Dial One trademark in violation of the Lanham Act. Defendants asserted the innocent infringer defense. The District Court awarded Dial One lost franchise fees, and awarded the franchisee plaintiffs lost profits. The Court of Appeals affirmed.
Sen. Hatch Introduces Cyber Crime Bill
10/18. Sen. Orrin Hatch (R-UT) introduced S 1568, the Cyberterrorism Prevention Act of 2001. Sen. Hatch described the bill in the Senate on October 18 as "an important piece of legislation to prevent terrorists from hijacking our computer system to wreak havoc with our essential infrastructure. This bill provides law enforcement with critical tools to combat cyberterrorism."
The bill includes numerous changes to 18 U.S.C. § 1030, the federal criminal code section dealing with "fraud and related activity in connection with computers". Provisions of the bill would apply generally, and not solely to terrorism. The bill would also authorize appropriations of $50 Million for ten FBI regional computer forensic laboratories.
The bill was referred to the Senate Judiciary Committee, of which Sen. Hatch is the ranking Republican.
10/18. Six attorneys who practice in the areas of intellectual property and litigation joined the Minneapolis office of the law firm of Fulbright & Jaworski. The six are Alan Anderson, Ronn Kreps, Christopher Larus, Renee Jackson, John Klos, and Sharna Wahlgren. See, release.
More News
10/18. The temporary adjournment of the House of Representatives, and the closing of its offices, due to biological threats, led to the postponement of all scheduled hearings. The House Commerce Committee's Subcommittee on Telecommunications and the Internet postponed its hearing titled "Transition to Digital Television: Progress on Broadcaster Buildout and Proposals to Expedite Return to Spectrum". The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property postponed its hearing titled "Intellectual Property Litigation".
10/18. Sen. Mike Enzi (R-WY) and others introduced S 1567, the Internet Tax Moratorium and Equity Act. See, Enzi release.
10/18. The U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in Celtronix Telemetry v. FCC, No. 00-1400.
Gov. Gilmore Testifies on Cyber Terrorism
10/17. The House Science Committee held at an abbreviated hearing titled "Cyber Terrorism – A View From the Gilmore Commission." Virginia Gov. James Gilmore offered his recommendations for dealing with the threat of cyber terrorism.
Gov. Gilmore is the Chairman of the Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction. This panel is often referred to simply as the Gilmore Commission. It is charged with writing three annual reports on terrorism, weapons of mass destruction, and cyber terrorism. It issued its second report in December 2000. See, TLJ story, Advisory Panel Reports on Cyber Terrorism, December 14, 2000.
Gov. Gilmore offered six recommendations. First, he praised President Bush's Executive Order of October 16 creating an interagency cyber security panel with representatives of federal agencies.
Second, he recommended that Congress create an independent advisory body, similar to the Gilmore Commission, to evaluate programs designed to promote cyber security and recommend strategies to the President and Congress.
Third, he recommended "an unprecedented partnership between the public and private sectors. Sharing of intelligence and real time information concerning impending or on-going cyber attacks will be critical. The private sector has legitimate concerns about their customers' privacy and confidence, as well as the value of their own proprietary information and earnings." He recommended the creation of a not for profit entity that can represent the interests of all affected stakeholders.
Fourth, he recommended the establishment of a special "Cyber Court" patterned after the court established in the Foreign Intelligence Surveillance Act (FISA). He elaborated that "prosecutors and investigators are often impeded in the enforcement process because the lack of effective procedures and understanding by many in the judiciary concerning the nature and urgency of cyber security."
Fifth, he recommended creation of "an entity to develop and implement a comprehensive plan for research, development, test and evaluation of processes to enhance cyber security in the same manner as we must do for other potential terrorist attacks."
Sixth, he recommended that "all government agencies continue their Y2K offices as 'cyber security offices.' "
Rep. Sherwood Boehlert (R-NY), the Chairman of the Committee, stated that "What the recent anthrax attacks and the attacks of September 11 have in common is that they turn our own basic systems of daily connections against us -- in those cases, the postal system and the transportation systems. Turning our computer systems against us would seem a logical extension of that mode of operation." Rep. Boehlert also singled out Gov. Gilmore's research and development recommendation as "music to our ears." He said that the Committee is working on related legislation.
The Committee's hearing was cut short to facilitate closure of the House due to biological threats. Following Gov. Gilmore's testimony, Rep. Boehlert, Rep. Ralph Hall (D-TX), and Rep. Vernon Ehlers (R-MI), made brief statements praising his recommendations. Other Committee members did not speak, and no questions were asked. The hearing will be completed at a later date.
Al Qaeda and Cyber Terrorism
10/17. Gov. Gilmore stated in his testimony to the House Science Committee that "many people questioned whether nation states or rogue terrorists had the capability to disrupt our critical infrastructures on a wide scale. Since September 11, we must presume that they do."
Gov Gilmore told TLJ after the hearing that he believes that bin Laden's Al Qaeda organization is capable of launching cyber attacks, but he has no specific intelligence. He stated: "They are militarily organized. They have shown themselves capable of setting themselves up in a very sophisticated way in a variety of nation states. And, they have demonstrated that they have the money, and financing to have access to major preparation and equipment. Therefore, you must assume that this knowledge of computers and information technology is available and can be purchased, and therefore, can be used as an attack. Yes. So, we don't have any intelligence, but logically you must conclude that."
Rep. Ehlers Advocates Treating Hackers As Terrorists
10/17. Rep. Vernon Ehlers (R-MI), a senior member of the House Science Committee, stated at the Committee's hearing on cyber terrorism on October 17 that hackers should be treated the same as terrorists.
He praised all of the recommendations advanced by Gov. Gilmore regarding dealing with cyber terrorism, but added that "hackers should also be considered terrorism, and the penalties that hackers get should be commensurate with terrorist activity, and not considered vandalism and pranks."
Rep. Ehlers made this statement at the close of the Committee's hearing, which was cut short to facilitate closure of the House because of biological threats. Because of the closing, his remarks were brief, and he was not afforded the opportunity to question Gov. Gilmore about this view.
18 U.S.C. § 2332 and 2332b provide criminal penalties for terrorism. These sections currently provide for up to life imprisonment for homicide and kidnapping offenses, and up to 25 years imprisonment for damaging property. Attempts and conspiracies to commit terrorist crimes are punished as though the offense had been completed. Anti terrorism bills which have passed the House and Senate would amend and enhance the anti terrorism laws.
Charles James Advocates Global Competition Network
10/17. Charles James, Assistant Attorney General in charge of the Antitrust Division, gave a speech in Paris titled "International Antitrust in the 21st Century: Cooperation and Convergence." He reviewed the history of cooperation between nations in antitrust enforcement, and advocated development of the Global Competition Network.
Referring to the General Electric - Honeywell matter, he stated that "we have come to understand that cooperation alone will not resolve some significant areas of difference among antitrust regimes that must be addressed if we are to maintain the integrity of antitrust on a global stage."
He stated that "because both markets and firms are becoming increasingly global, antitrust agencies increasingly are finding that they are reviewing mergers that are also being reviewed by five, ten, or twenty other agencies around the world. When transactions are reviewed by multiple authorities, the risk of substantive and procedural conflicts can increase dramatically, and effective cooperation among a large number of agencies can be extraordinarily difficult."
He added that "We support the proposed Global Competition Network (GCN) ... a venue where senior antitrust officials from developed and developing countries formulate and develop consensus on proposals for procedural and substantive convergence in antitrust enforcement."
House Passes Anti Money Laundering Bill Without Internet Gambling Provisions
10/17. The House passed HR 3004, the Financial Anti Terrorism Act , by a vote of 412 to 1. See, Roll Call No. 390. The sole vote in opposition was cast by Rep. Ron Paul (R-TX). The version of the bill just approved by the House deleted the provisions contained in the version adopted by the House Financial Services Committee on October 11 that would have barred the use of credit, credit cards, or electronic funds transfers in connection with illegal Internet gambling. See, committee version [PDF], at §§ 307 and 308.
The Senate passed it anti money laundering bill last week as a part of its anti terrorism package, S 1510, the USA Act. The House anti terrorism bill, HR 2975, the PATRIOT Act, does not include anti money laundering provisions. For this reason, and because of other differences between the two anti terrorism packages, a conference committee must resolve the differences.
Congress Adjourns for Several Days
10/17. The House adjourned midday on October 17 until 12:30 PM on Tuesday, October 23, 2001. All House office buildings in the Capitol complex are closed. The Hart, Dirksen and Russell Senate Office Buildings closed late on October 17, and will remain closed through Sunday, October 21. The purpose of the closures is to allow environmental, law enforcement, and medical officials to test for the presence of biological threats.
Copyright Office Closes
10/17. The Library of Congress, which includes the Copyright Office, announced that "All Library of Congress buildings will be closed to the public and staff beginning Thursday, October 18 until such time as testing of the air supply systems is completed by the Centers for Disease Control. Although there is no evidence of the anthrax bacteria in any part of the Library of Congress, the buildings are being closed as a precautionary measure. These tests are being conducted on all Capitol Hill complex buildings. Library officials are estimating that the Library will reopen on Tuesday, October 23."
FCC Restricts Deliveries
10/17. The FCC issued two releases on October 17 pertaining to the filing of documents with the FCC. One release states that "Effective October 18, 2001, the Commission will no longer accept hand delivered or messenger delivered paper filings at its headquarters location, 445 - 12th Street, SW, Washington, DC 20554. The due date for any filings due at the Commission Thursday October 18, 2001, or Friday October 19, 2001, is hereby extended to Monday, October 22, 2001." A second release states that "The staff at the Secretary's filing counter will not accept documents enclosed in envelopes. Any filer or messenger carrying such documents into the Commission's building will be asked to leave the building and dispose of the envelope in a receptacle that will be placed outside the building. Once this is done, the filer or messenger will be allowed to proceed to the filing counter."
10/17. The law firm of Latham & Watkins named Charles Nathan Co-Chair of its firmwide M&A Practice Group. See, release.
More News
10/17. USTR Robert Zoellick gave a speech at the Asia Pacific Economic Cooperation (APEC) forum in Shanghai, China.
10/17. The Senate Commerce Committee approved by voice votes the nominations of Phillip Bond to be Under Secretary for Technology, at the Department of Commerce, and John Marburger to be Director of the Office of Science and Technology Policy. See, release.
10/17. The House Government Reform Committee's Subcommittee on Technology and Procurement Policy postponed its hearing titled "Turning the Tortoise Into the Hare: How the Federal Government Can Transition From Old Economy Speed to Become a Model for Electronic Government." The House adjourned on October 17 due to biological threats. The hearing had been scheduled for 2:00 PM.
House Passes Internet Tax Nondiscrimination Act
10/16. The House passed HR 1552, the Internet Non-Discrimination Act, by a unanimous voice vote. This bill  extends the current moratorium on Internet access taxes, and multiple and discriminatory taxes on Internet commerce, for two years. The current ban expires on October 21. The measure was considered under suspension of the rules, meaning that it could not be amended, and required a two thirds majority for passage. The Senate has yet to pass legislation to extend the ban.
Sen. Ron Wyden (D-OR) stated in a release that "Congressman Cox and I have been working together for a long time to ban discriminatory Internet taxes ... I hope his success today in the House will pave the way for the Senate to expeditiously approve a similar two year extension of the moratorium. I'm engaged in a bipartisan full court press to get the Senate to pass a two-year extension before the moratorium expires this Sunday so the Senate can return to its constructive conversations regarding a more permanent solution."
Bush Issues Executive Order on Cyber Security
10/16. President Bush issued an executive order titled "Critical Infrastructure Protection in the Information Age". This order creates the "President's Critical Infrastructure Protection Board", yet another executive branch board to coordinate federal efforts and programs to protect information systems.
The order provides that "the Board shall recommend policies and coordinate programs for protecting information systems for critical infrastructure, including emergency preparedness communications, and the physical assets that support such systems." The board's responsibilities will extend to information systems and emergency preparedness communications.
The order also lists specific responsibilities of this newly created board, including: coordinating outreach to and consultation with the private sector; promoting information sharing with industry, state and local governments, and non governmental organizations; coordinating programs and policies for responding to information systems security incidents; coordinating federal research and development; and promoting cyber crime programs, assisting federal law enforcement agencies in gaining cooperation from executive branch departments and agencies, and supporting federal law enforcement agencies' investigation of illegal activities involving information systems for critical infrastructure.
The board will be large, and will be made up of cabinet members and other executive branch officials. The FCC will have one representative on the board.
The order also creates a "National Infrastructure Advisory Council", an advisory body made of representatives of the private sector, academia, and state and local government. It "shall provide the President advice on the security of information systems for critical infrastructure supporting other sectors of the economy: banking and finance, transportation, energy, manufacturing, and emergency government services."
The order further provides that the new board "shall work in coordination with the Critical Infrastructure Assurance Office (CIAO) and the National Institute of Standards and Technology of the Department of Commerce, the National Infrastructure Protection Center (NIPC), and the National Communications System (NCS)."
The order also references technological convergence. It states that "Changes in technology are causing the convergence of much of telephony, data relay, and internet communications networks into an interconnected network of networks. The NCS and its National Coordinating Center shall support use of telephony, converged information, voice networks, and next generation networks for emergency preparedness and national security communications functions assigned to them in Executive Order 12472." EO 12472 created the NCS in 1984.
Cyber Terrorism Panels to Meet
10/16. Cyberterrorism will be the topic of two events in Washington this week. On Wednesday, October 17, at 10:00 AM, the House Science Committee will hold a hearing titled "Cyber Terrorism -- A View From the Gilmore Commission."
On Thursday morning, October 18, the Center for Strategic and International Studies (CSIS) will host a half day conference titled "Strengthening Homeland Cyberdefense." Ron Dick, Director of the FBI's National Infrastructure Protection Center, will speak at 9:25 AM. There will be a panel titled "A Policy Agenda for Homeland Cyberdefense," at 9:45 AM, with Sen. Bob Bennett (R-UT) and Rep. Sherwood Boehlert (R-NY). There will be a panel titled "The Private Sector and Homeland Cyberdefense" at 11:00 PM. The panelists will be Steve Blumenthal (Genuity), George Conrades (Akamai), David Langstaff (Veridian), Gail Phipps (CACI International), Ernst Volgenau (SRA International), and John Tritak (Critical Infrastructure Assurance Office). John Hamre, P/CEO of the CSIS, and Harris Miller, P/CEO of the ITAA, will also speak. See also, CSIS notice.
NIPC Issues Report on Cyber Protest Hacking
10/16. The FBI's NIPC released a report [PDF] titled "Cyber Protests: The Threat to the U.S. Information Infrastructure." The report states that while "cyber protests that have occurred thus far have had little impact on U.S. infrastructure ... Cyber protesters are becoming increasingly more organized and their techniques more sophisticated but, most likely, will continue to deface web sites and perform DoS attacks." Tthe report also reviews the history of politically motivated hacking by Chinese, Israeli, Palestinian, Pakistani, Indian, and Japanese hackers.
Rep. Hansen Opposes Reallocation of Military Spectrum for 3G
10/16. Rep. James Hansen (UT) said in the House that "the continued viability of some of the very weapons systems being used now is threatened by a concerted effort to reallocate portions of the radio frequency spectrum from the military to the commercial sector." He is a senior member of the House Armed Services Committee.
He continued that "This effort is being led by the telecommunications industry, which is seeking access to additional frequencies to support development of advanced wireless services. They have vigorously argued that unless the Federal Government provides access to the 1755 through 1850 megahertz frequency band, the United States will forfeit its leadership of the worldwide telecommunications market."
He concluded: "Now, I do not pretend to know whether this claim is true or not, but I do know that forcing the military to give up this particular part of the frequency spectrum will have a significant negative effect on national security and will put our service members at greater risk ... We have a solemn obligation to protect the people of the United States, and no argument from any special interest group will change that. So do not even think about asking for access to military frequencies. The answer is no and will stay no."
FTC Takes Action Against Online Fraud
10/16. The FTC filed civil complaint on October 11 in U.S. District Court (WDWash) against Bargains & Deals Magazine and its principal, Michael Casey, alleging that they made misrepresentations over the Internet to induce consumers to purchase merchandise, and then either failed to deliver the merchandise promised or did not send any merchandise. The complaint alleges violation of the FTC Act, 15 U.S.C. § 41 et seq., and the FTC's Mail Order Rule. The FTC also obtained a temporary restraining order. See, FTC release.
The FTC filed an administrative complaint on October 11 against FanBuzz, Inc., alleging that its sold textile products over the Internet without disclosing whether such products were made in the U.S.A., in violation of the FTC Act and the Textile Fiber Products Identification Act. The FTC and FanBuzz also filed an Agreement Containing Consent Order, which prohibits future violations.
The FTC published a notice in the Federal Register of the FanBuzz settlement; this notice also sets November 11, 2001 as the deadline for public comments. See, Federal Register, October 16, 2001, Vol. 66, No. 200, at Pages 52625 - 52626.
Anti Terrorism Legislation and Liberty
10/16. The House and Senate have yet to reconcile the differences between their two anti terrorism bills, S 1510, the USA Act, and HR 2975, the PATRIOT Act.
On Thursday, October 18, The New Republic will host a panel discussion titled "Security v. Liberty: Is There a Choice?" The speakers will be James Woolsey (a former CIA Director), Rep. Bob Barr (R-GA), Marc Rotenberg (EPIC), Fred Cate (University of Indiana), and Jeffrey Rosen (The New Republic). This event will be at 6:30 PM at National Press Club.
The Cato Institute published a paper [PDF] titled "Watching You: Systematic Federal Surveillance of Ordinary Americans", by Charlotte Twight. See also, executive summary [HTML].
Rep. Chris Smith Introduces Spam Bill
10/16. Rep. Christopher Smith (R-NJ) introduced HR 3146, the Netizens Protection Act of 2001, an anti spam bill. It was referred to the House Commerce Committee.
The bill provides that "No person may initiate ... the transmission of an unsolicited electronic mail message ... if the message (1) does not contain the name, physical address, and electronic mail address of the person who initiates the transmission of the message; (2) does not provide an electronic method by which the recipient of the message can contact the person who initiated the transmission of the message to request that no further such messages be sent ...; or (3)(A) is part of a bulk transmission of such messages; and (B) includes information that is located in the subject line of the message and is false or misleading with respect to the body of the message."
The bill would also create a private right of action for recipients of banned spam. The bill also sets statutory damages at $500 per item. The bill would not preempt state anti spam laws.
FCC May Fine SBC $2.52 Million for False Statements
10/16. The FCC announced its intent to fine SBC $2.52 Million for filing inaccurate information in the Section 271 proceeding pertaining to Kansas and Oklahoma. The FCC issued a Notice of Apparent Liability and Order and a release [PDF] summarizing the order.
The FCC found that SBC submitted affidavits containing false information in support of its request for permission to provide long distance service in Kansas and Oklahoma. However, the FCC found that the conduct was negligent, rather than deliberate.
Russell Frisby, President of Comptel, stated in a release that "The fine issued by the FCC this afternoon is the regulatory equivalent of a 'five dollar' parking ticket. CompTel is disappointed that the FCC did not take stronger action and send a message to SBC that the Commission is serious about its role in opening local phone markets and that the accuracy of information filed at the Commission is paramount."
SEC Commissioner Unger Advocates Securities Law Reform
10/16. SEC Commissioner Laura Unger gave a speech in which she advocated updating securities laws and regulations in light of Internet technologies.
She stated that "the current regulatory system was created in a time when technology was not what it is today." She said that some areas "particularly need reform. The first is embracing technology and the Internet in the offering process. Although companies raised more than $400 billion in the U.S. private market last year, the Commission's rules constrain companies from taking advantage of low-cost electronic communications to raise capital from potentially qualified investors. Eliminating the 'general solicitation' prohibition in the private market would enable small companies to use the Internet to reach a wider breadth of potentially qualified investors."
Second, she advocated reforming "the distinctions between oral and written communications that have become anomalous with advancements in technology. Is streaming video 'oral' until it is archived? The legal distinctions between written and oral communications mostly discourage disclosure - which does not make for an efficient market. For example, to prevent issuers from 'conditioning the market' during an offering, current rules limit how and what issuers communicate to the public." She also addressed the oral versus written distinction in the context of electronic roadshows.
Third, Unger stated that "the Internet could speed up the 'back office' part of transactions - especially IPO investments. Although technology means that access to an issuer's prospectus can be real time, the Commission continues to insist on brokers satisfying the prospectus 'delivery' obligation. Any new system will have to consider whether and to what extent access may be deemed delivery."
Commissioner Unger spoke to the Westchester / Southern Connecticut Chapter of The American Corporate Counsel Association.
Senate Committee Holds Hearing on E-911
10/16. The Senate Commerce Committee held an oversight hearing to examine the implementation of the Wireless Communication and Safety Act and the integration of emergency 911 technologies. This hearing had originally been scheduled for September 11. Senators encouraged accelerated implementation. Tom Sugrue of the FCC's Wireless Telecommunications Bureau said that "the Commission is serious about ensuring the deployment of wireless E911."
In 1996, the FCC adopted rules which set October 1, 2001 as the deadline for wireless carriers to begin the process of deploying technology to accurately report the location of wireless 911 calls. In 1999, the Congress passed the Wireless Communications and Public Safety Act, which mandated 911 as the universal number for emergency calling and addressed carrier liability protection and privacy issues. Earlier this month the FCC extended the October 1 deadline for five major carriers. See, FCC release.
Sen. Ron Wyden (D-OR) and Sen. Daniel Inouye (D-HI) presided at the hearing. Sen. Conrad Burns (R-MT) and Sen. Gordon Smith (R-OR) also participated. Sen. Wyden stated, "I don't want this to become the longest running battle since the Trojan War." Sen. Inouye said to Thomas Sugrue that "September 11 demonstrated to us how important 911 was ... So, I hope you will get out the whip."
See also, prepared testimony of witnesses in PDF: Thomas Sugrue (FCC Wireless Telecom Bureau), Michael Amarosa (TruePosition, Inc.), Jenny Hansen (State of Montana), John Melcher (National Emergency Number Assoc.), Brett Sewell (SnapTrack, Inc.), and Thomas Wheeler (CTIA).
7th Circuit Rules in Lanham Act 43(a) Case
10/16. The U.S. Court of Appeals (7thCir) issued its opinion in First Health Group v. BCE Emergis, a suit involving Section 43(a) of the Lanham Act. Plaintiff, an intermediary between hospitals and insurers, filed a complaint in U.S. District Court (NDIll) against defendant, another such intermediary, alleging that defendant's use of the term "preferred provider organization" was misleading, and violated Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). The District Court granted summary judgment to defendant. The Court of Appeals affirmed. Judge Easterbrook wrote: "This entire suit strikes us as one designed to hamstring a competitor whose success reflects its ability to please its trading partners. If the vocabulary of a business such as [defendant] is to be revised, that is a job for legislatures and regulatory agencies, rather than for judges and juries in suits under the Lanham Act and state consumer- fraud statutes."
Transition to Digital TV
10/16. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing on Thursday, October 18, titled "Transition to Digital Television: Progress on Broadcaster Buildout and Proposals to Expedite Return to Spectrum." The witnesses will be Rick Chessen (Associate Bureau Chief, Mass Media Bureau, FCC), Jim Yager (P/CEO of Benedek Broadcasting Corporation), Michael McCarthy (SVP of Belo Corporation), John Lawson (P/CEO of APTS), Dean Goodman (COO of PAXtv), Paul Crouch (President of Trinity Broadcasting Network), David Donovan (President of MSTV), Michael Petricone (VP of Consumer Electronic Association), Richard Green (P/CEO of CableLabs), and Brian Lamb (P/CEO C-SPAN).
10/16. The NCTA submitted a report [PDF] regarding digital must carry requirements to the FCC. It rebuts the NAB's filing [PDF] to the FCC of August 14.
House to Vote on Extension of Net Tax Ban
10/16. The House of Representatives is scheduled to consider HR 1552, the Internet Tax Nondiscrimination Act, under suspension of the rules. Under this procedure, the time for debate will be limited, no amendments will be permitted, and passage will require a two thirds majority.
This bill would extend the current moratorium on Internet access taxes, and multiple and discriminatory taxes on Internet commerce. The current three year ban expires on October 21. On October 10 the House Judiciary Committee approved an amendment in the nature of a substitute offered by Rep. Spencer Bachus (R-AL) that provides a two year extension. The original bill contained a five year extension. The Senate is also likely to take up extension legislation this week.
Senate to Hold Hearing On E-911
10/16. The Senate Commerce Committee will hold an oversight hearing on Tuesday morning, October 16, to examine the implementation of the Wireless Communication and Safety Act and the integration of emergency 911 technologies. The scheduled witnesses are Thomas Sugrue (Chief of the FCC's Wireless Telecommunications Bureau), Michael Amarosa (TruePosition), Jenny Hansen (State of Montana), John Melcher (National Emergency Number Association), Brett Sewell (SnapTrack), and Thomas Wheeler (CTIA). Sen. Daniel Inouye (D-HI), the Chairman of the Communications Subcommittee, will preside.
Nextwave Settlement
10/16. The Washington Post reported in an October 16 story by Christopher Stern that "The nation's major mobile telephone companies have reached an agreement with NextWave Telecom Inc. in which they would pay almost $16 billion to end a five-year dispute over a slice of airwaves".
NextWave obtained spectrum licenses at FCC auctions in 1996. The FCC permitted NextWave to obtain the licenses under an installment plan, thus creating a debtor creditor relationship. NextWave did not make payments required by the plan, and filed a Chapter 11 bankruptcy petition. The FCC then cancelled the licenses. However, the FCC was blocked by the bankruptcy court, citing § 525 of the Bankruptcy Code. The U.S. District Court (SNDY) affirmed. The U.S. Court of Appeals (2ndCir) issued its order reversing and remanding the case on Nov. 24, 1999; it issued its opinion explaining its reversal in May 2000. The FCC then re-auctioned this spectrum to Verizon Wireless, Voice Stream and other successful bidders, which intend to use it for third generation wireless, and other, services.
NextWave next petitioned the FCC to reconsider its cancellation of its licenses. The FCC refused, and NextWave petitioned for review by the U.S. Court of Appeals (DCCir). The DC Circuit ruled on June 22 that the 2nd Circuit had not already addressed NextWave's bankruptcy claims. It wrote in its opinion that the FCC "violated the provision of the Bankruptcy Code that prohibits governmental entities from revoking debtors' licenses solely for failure to pay debts dischargeable in bankruptcy. The Commission, having chosen to create standard debt obligations as part of its licensing scheme, is bound by the usual rules governing the treatment of such obligations in bankruptcy."
10/16. The Internet Security Alliance picked John Thomas to be its Director of Strategic Initiatives. The Internet Security Alliance is a collaborative effort between Carnegie Mellon University’s Software Engineering Institute (SEI) and its CERT Coordination Center and the Electronics Industries Alliance (EIA). See, EIA release.
10/16. Verizon named Allan Thoms to the newly created position of Vice President - Public Policy and External Affairs for Verizon's Northwest Region. He will be responsible for regulatory, governmental and external affairs for Verizon in Washington, Oregon and Idaho. See, Verizon release.
More News
10/16. President Bush signed HR 1860, the "Small Business Technology Transfer Program Reauthorization Act of 2001," which extends the authority for the Small Business Technology Transfer Program through FY 2009. See, White House release.
10/16. USTR Robert Zoellick gave a speech, and answered questions, in Singapore, regarding trade, and a new round of WTO negotiations. See, transcript.
10/16. The U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in COMSAT Corp v. FCC, No. 00-1458.

 Go to News Briefs from October 11-15, 2001.