News from December 6-10, 2001

Divided Court Upholds Injunction Against Spamming by Ex Intel Employee
12/10. The California Court of Appeal (3) issued its opinion [PDF] in Intel v. Hamidi, an appeal of an injunction issued against a former Intel employee barring him from sending unsolicited e-mail to addresses on Intel's computer systems. The injunction was based upon California tort law pertaining to trespass to chattels. A divided Court of Appeal panel affirmed the injunction.
Background. Intel fired Hamidi. He was an angry ex-employee with a talent for spamming. He and another defendant (FACE Intel, which defaulted) obtained Intel's e-mail address list and on six occasions sent e-mail to up to 29,000 employees. Intel was unable to block this e-mail.
Superior Court. Intel filed a complaint in the Superior Court of Sacramento County, California, against Hamidi and another party alleging nuisance and trespass to chattels. The District Court granted summary judgment to Intel on the trespass to chattels claim, and granted it an injunction which states that "defendants, their agents ... are hereby permanently restrained and enjoined from sending unsolicited e-mail to addresses on INTEL's computer systems."
Court of Appeal. A divided three judge panel of the Court of Appeal affirmed the injunction. Justice Fred Morrison wrote the opinion of the Court, in which Arthur Scotland joined. Daniel Kolkey wrote a dissent (beginning at page 35).
Trespass to Chattels. Relying on Prosser, the Restatement 2d Torts, and case law, the Court stated that trespass to chattels occurs when one intentionally intermeddles with another's chattel where the intermeddling is harmful to the possessor's materially valuable interest in the physical condition, quality, or value of the chattel. The Court also held that "demonstrating harm is not necessary" when damages are not sought. The Court added that Intel "showed it was hurt by the loss of productivity caused by the thousands of employees distracted from their work and by the time its security department spent trying to halt the distractions after Hamidi refused to respect Intel's request to stop invading its internal, proprietary e-mail system by sending unwanted emails to thousands of Intel's employees on the system." The Court concluded that Intel "showed he was disrupting its business by using its property and therefore is entitled to injunctive relief based on a theory of trespass to chattels."
Trespass to Chattels in Cyberspace. The Court noted that while trespass to chattels has been a rarely invoked legal theory, it has enjoyed a revival with the development of cyberspace. Citing several recent cases, the Court wrote that sending electronic mail can constitute trespass to chattels. See, for example, CompuServe v. Cyber Promotions (S.D. Ohio 1997) 962 F.Supp. 1015; Hotmail Corporation v. Van$ Money Pie (N.D.Cal. 1998); America Online v. IMS (E.D.Va. 1998) 24 F.Supp.2d 548; and eBay Inc. v. Bidder's Edge, Inc. (N.D.Cal. 2000) 100 F.Supp.2d 1058.
Free Speech. Hamidi, and two amicus curiae parties, also argued that the injunction violates federal First Amendment and California Constitution free speech rights. The Court held that the First Amendment is not implicated, because there was no state action; this is a dispute between private parties. Moreover, the Court wrote, "Judicial enforcement of neutral trespass laws has been held not to constitute state action." Also, the Court rejected a public forum argument. It wrote that "Private e-mail servers differ from the Internet; they are not traditional public forums. ... The Intel e-mail system is private property used for business purposes. Intel's system is not transformed into a public forum merely because it permits some personal use by employees."
Dissent. Judge Kolkey dissented on the issue of trespass to chattels. He wrote that "While common law doctrines do evolve to adapt to new circumstances, it is not too much to ask that trespass to chattel continue to require some injury to the chattel (or at least to the possessory interest in the chattel) in order to maintain the action." He distinguished the other spam trespass to chattel cases on the basis that in those cases the spammers "burdened the computer equipment, thereby interfering with its operation and diminishing the chattel's value".
First Circuit Rules on Advertising Injuries and IPR Claims
12/10. The U.S. Court of Appeals (1stCir) issued its opinion in Ekco v. Travellers Indemnity, a case regarding whether an insurance policy covering advertising injuries applies to suits for trade dress infringement and patent infringement. The Appeals Court held that there is no coverage in this case.
Background. Ekco sells kitchen products, including metal tea kettles. Chantal Cookware, which also makes tea kettles, alleged that Ekco copied one of its tea kettles. Chantal filed a complaint in another action in U.S. District Court (SDTex) against Ekco alleging trade dress infringement and unfair competition under both the Lanham Act, 15 U.S.C. § 1125(a), and state law, and for infringement of a design patent covering a Chantal tea kettle, pursuant to 35 U.S.C. § 271. Travellers Indemnity had issued an insurance policy to Ekco. Ekco asserted that Travellers had a duty to defend an indemnify it in the Chantal proceeding, pursuant to the policy's advertising injury provisions. Travellers refused.
Insurance Policy. The policy provides coverage for "Advertising injury", which it defines as "injury arising out of one or more of the following offenses: a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; b. Oral or written publication of material that violates a person's right of privacy; c. Misappropriation of advertising ideas or style of doing business; or d. Infringement of copyright, title or slogan."
District Court. Ekco filed the a complaint in the present action in New Hampshire state court. Travellers removed the case to U.S. District Court (DNH), based upon diversity. On cross motions for summary judgment, the District Court ruled in favor of EKCO -- that there was coverage. This appeal followed.
Appeals Court. The First Circuit, construing the meaning of the term "advertising", held that there was not coverage, and reversed and remanded.
Supreme Court Rules Utility Patents May Be Issued for Plants
12/10. The Supreme Court issued its opinion [PDF] in JEM AG Supply v. Pioneer Hi-Bred, a case involving patents in plants. Justice Clarence Thomas, writing for a six justice majority, wrote that utility patents may be issued for plants pursuant to 35 U.S.C. § 101; hence, the Plant Variety Protection Act, 7 U.S.C. § 2321 et seq., and the Plant Patent Act of 1930, 35 U. S. C. §§ 161-164, are not the exclusive means of obtaining a federal statutory right to exclude others from reproducing, selling, or using plants or plant varieties.
Supreme Court Denies Cert in PSLRA Case
12/10. The Supreme Court denied certiorari in Scholastic Corp. v. Truncellito, a case regarding pleading standards in class action securities suits under the Private Securities Litigation Reform Act (PSLRA). See, December 10 Order List at page 6 (No. 01-397). See also, opinion of the U.S. Court of Appeals (2ndCir).
Bush Administration to Raise MTOPS Threshold for HPC Exports
12/10. The State Department issued a release in which it stated that the "Bush administration intends to raise sharply the threshold for exports of advanced computers to a group of more than 40 countries including Russia, China, India, Pakistan and Israel". It also stated that "the threshold for export without a license to the group called Tier 3 countries will rise to cover computers capable of 190,000 million theoretical operations per second (MTOPs), up from 85,000 MTOPs now."
Meehan Bill Would Ban Internet Tobacco Sales
12/10. Rep. Marty Meehan (D-MA) introduced HR 3456, the "Tobacco Free Internet for Kids Act", a bill to prohibit the Internet sale of tobacco products to minors. He also introduced a similar bill, HR 2914, in the 106th Congress. That bill was referred to the House Commerce Committee, but never received a hearing or a vote. See, Meehan release.
12/10. Larry Cockell was named SVP and chief security officer of AOL Time Warner, effective January 14, 2002. He is currently Deputy Director of the U.S. Secret Service. See, AOL release.
12/10. The law firm of Cooley Godward announced that eight of the firm's attorneys will become partners, effective January 1, 2002. The new partners include Christopher Pace, Ricardo Rodriguez, James Vazquez Azpiri, and Kevin Zimmer. Pace focuses on intellectual property litigation, mass tort and securities class action litigation, antitrust, and business litigation for technology companies, in the firm's San Diego office. Rodriguez focuses on patent litigation in the firm's Palo Alto office. Azpiri works in the San Francisco office, where he focuses on business immigration, including the representation of technology companies with respect to hiring and retaining foreign employees. Zimmer counsels clients on intellectual property portfolio development and enforcement in the San Diego office. See, Cooley release.
4th Circuit Upholds 'Carry One Carry All' Rule Against Free Speech Challenge
12/7. The U.S. Court of Appeals (4thCir) issued its opinion in Satellite Broadcasting and Communications Association v. FCC, a case in which direct broadcast satellite (DBS) carriers challenged the constitutionality of the "carry one, carry all" rule of the Satellite Home Viewer Improvement Act of 1999 (SHVIA). The District Court upheld the rule. The Court of Appeals affirmed.
Background. The SHVIA created a statutory copyright license that allows DBS carriers to carry the signals of local broadcast TV stations without obtaining authorization from the holders of copyrights in programs. The SHVIA also imposes a "carry one, carry all" rule, at 47 U.S.C. § 338(a)(1), under which any DBS carriers that choose to take advantage of the statutory copyright license by carrying one broadcast station in a local market to carry all requesting stations in that market.
District Court. The Satellite Broadcasting and Communications Association (SBCA), DirecTV, and EchoStar filed a complaint in the U.S. District Court (EDVa) against the FCC alleging that the "carry one, carry all" rule violates the Copyright Clause, the First Amendment, and the Due Process and Takings Clauses of the Fifth Amendment. The National Association of Broadcasters (NAB) and PBS intervened on the side of the FCC. The District Court granted the FCC's motion to dismiss. See, SBCA v. FCC, 146 F.Supp.2d 803 (E.D. Va. 2001). The District Court held that the "carry one, carry all" rule is a content neutral regulation of the satellite carriers' speech and upheld the rule under intermediate First Amendment scrutiny. In addition, the court rejected the satellite carriers' other arguments. This appeal followed.
First Amendment. The Appeals Court first held that the restriction upon speech imposed by the SHVIA is content neutral, and therefore, intermediate scrutiny, rather than strict scrutiny, applies. The Court reasoned that DBS carriers, like the cable operators discussed by the Supreme Court in Turner Broadcasting System v. FCC, 512 U.S. 622 (1994) (aka Turner I), function primarily as conduits for the speech of others. However, both DBS carriers and cable operators "engage in speech protected by the First Amendment when they exercise editorial discretion over the menu of channels they offer to their subscribers." The Court continued that since the restriction does not follow from government disagreement with the content carried, or the carrier's choice of content, it is a content neutral restriction.
The Appeals Court then held that the restriction on speech imposed by the SHVIA meets the intermediate scrutiny test, as announced by the Supreme Court in U.S. v. O'Brien, 391 U.S. 367 (1968). That is, "it furthers an important or substantial governmental interest; if the governmental interest is unrelated to the suppression of free expression; and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest." The Court found that the "carry one, carry all" rule advances the goal of preserving a multiplicity of broadcast outlets for over the air viewers.
Copyright Clause. The Appeals Court rejected the DBS carriers' argument that the SHVIA exceeds Congress's authority under the Copyright Clause by playing favorites by using the copyright power to protect the speech of independent local broadcasters. The Appeals Court stated that the "Congress's powers under the clause to grant copyright protection and to define the scope of that protection are very broad". It continued that "The copyright power certainly includes the authority to grant statutory copyright licenses like those created by SHVIA and the Cable Act. These statutory licenses are designed to ensure that the high transaction costs involved in privately acquiring copyright clearances for the retransmission of broadcast programming do not unduly restrict the free flow of information to the public." The Court concluded that "We see no reason why the Copyright Clause would prohibit Congress from conditioning its grant of a statutory copyright license on compliance with the carry one, carry all rule. ... Congress was simply performing its constitutionally assigned task of striking a balance between the interests of authors and the public interest."
The Appeals Court also denied three petitions for review of the FCC's SHVIA order that had been consolidated with this appeal.
Hold Out States Seek Further Remedies Against Microsoft
12/7. Nine states filed a pleading [PDF] titled "Plaintiff Litigating States' Remedial Proposals" with the U.S. District Court (DC) in the Microsoft antitrust case. Most of the 40 page document is comprised of single spaced  text constituting proposed additional language restraining the activities of Microsoft. It requests that the Court enter judgment stating that "Microsoft shall disclose and license all source code for all Browser products and Browser functionality ..." It also requests the Court to compel Microsoft to include Sun Microsystems' version of Java.
The Justice Department and nine states entered into a proposed settlement on November 2. They submitted a revised proposed settlement agreement on November 6. Nine states (California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, and West Virginia) and the District of Columbia have not joined in that settlement.
The nine hold out states condemned the agreement negotiated by the Justice Department and other states. They wrote that "Unlike the previously announced settlement between the Department of Justice ("DOJ") and Microsoft, these remedies create a real prospect of achieving what the DOJ said it intended to accomplish: ``stop Microsoft from engaging in unlawful conduct, prevent any recurrence of that conduct in the future, and restore competition in the software market ...´´ "
Microsoft issued a release in which it stated that the proposals were "extreme and not commensurate with what is left of the case".
Excerpts from Holdout States' Proposed Remedies
12/7. The following are excerpts from the "Plaintiff Litigating States' Remedial Proposals" filed in the Microsoft antitrust case on Friday, December 7. These parties request that the Court include in its final judgment the following language:
Ban on Binding. "Microsoft shall not, in any Windows Operating System Product (excluding Windows 98 and Windows 98 SE) it distributes beginning six months after the date of entry of this Final Judgment, Bind any Microsoft Middleware Products to the Windows Operating System unless ..."
Disclosure of APIs. "Microsoft shall disclose to ISVs, IHVs, IAPs, ICPs, OEMs and Third-Party Licensees ... all APIs, Technical Information and Communications Interfaces ..."
"Microsoft shall not take any action that it knows, or reasonably should know, will directly or indirectly, interfere with or degrade the performance or compatibility of any non-Microsoft Middleware when Interoperating with any Microsoft Platform Software ..."
"Microsoft shall not enter into or enforce any Agreement in which a third party agrees, or is offered or granted consideration, to: a. restrict its development, production, distribution, promotion or use of (including its freedom to set as a default), or payment for, any non-Microsoft product or service; ..."
"Microsoft shall not condition the granting of a Windows Operating System Product license, ... on a licensee agreeing to license, promote, distribute, or provide an access point to, any Microsoft Middleware Product."
No Retaliation. "Microsoft shall not take or threaten to take any action adversely affecting any individual or entity that participated in any phase of the antitrust litigation ..."
Default Middleware. "Microsoft shall not, in any Windows Operating System Product ... make Microsoft Middleware the Default Middleware for any functionality unless the Windows Operating System Product (i) affords the OEM or Third-Party Licensee the ability to override Microsoft’s choice of a Default Middleware and designate other Middleware the Default Middleware for that functionality, and (ii) affords the OEM, Third-Party Licensee or non-Microsoft Middleware the ability to allow the end user a ... choice to designate other Middleware as the Default Middleware in place of Microsoft Middleware."
Source Code. "Microsoft shall disclose and license all source code for all Browser products and Browser functionality."
Java. "For a period of 10 years from the date of entry of the Final Judgment, Microsoft shall distribute free of charge, in binary form, with all copies of its Windows Operating System Product and Internet Browser (including significant upgrades) a competitively performing Windows compatible version of the Java runtime environment (including Java Virtual Machine and class libraries) compliant with the latest Sun Microsystems Technology Compatibility Kit as delivered to Microsoft ..."
Apple. "Microsoft shall port each new major release of Office to the Macintosh Operating System within 60 days of the date that such version becomes commercially available for use with a Windows Operating System Product ..."
IPR. "Microsoft shall, within 20 days of request, license to IAPs, ICPs, IHVs, ISVs, OEMs and Third-Party Licensees all intellectual property rights owned or licensable by Microsoft that are required to exercise any of the options or alternatives provided or available to them under this Final Judgment (including without limitation enabling their product(s) to Interoperate effectively with Microsoft Platform Software), on the basis that: a. the license shall be on a royalty-free basis and all other terms shall be reasonable and non-discriminatory; b. the license shall not be conditional on the use of any Microsoft software, API, Communications Interface, Technical Information or service ..."
Standards. If Microsoft publicly claims that any of its products are compliant with any technical standard ("Standard") that has been approved by, or has been submitted to and is under consideration by, any organization or group that sets standards (a "Standard-Setting Body"), it shall comply with that Standard.
Special Master. "... the Court will appoint a special master (the "Special Master") to monitor Microsoft’s obligations under the Final Judgment ..."
People and Appointments
12/7. On Thursday, December 6, the Senate confirmed Susan Bies and Mark Olson to be members of the Board of Governors of the Federal Reserve System. On Friday, December 7, they were sworn in to office. See, FRB release.
12/7. James Rogan was sworn in as head of the USPTO.
More News
12/7. The FCC's Common Carrier Bureau released a notice [PDF] titled "Proposed First Quarter 2002 Universal Service Contribution Factor". (CC Docket No. 96-45.)
12/7. President Bush made a statement regarding the implementation of the U.S. Jordan Free Trade Agreement [PDF].
12/7. The FBI's National Infrastructure Protection Center (NIPC) published the December 7 issue of Highlights [PDF] in its web site. It also published the December 3 issue of CyberNotes [PDF]; this is a bi-weekly summary of cyber vulnerabilities, malicious scripts, information security trends, virus information, and other critical infrastructure related best practices. (Issue No. 2001-24.)
House Passes Trade Promotion Authority Bill
12/6. The House passed HR 3005, the Bipartisan Trade Promotion Authority Act of 2001, by a roll call vote of 215 to 214. See, Roll Call No. 481. It is sponsored by Rep. Bill Thomas (R-CA), Rep. Cal Dooley (D-CA), and others. Trade promotion authority (TPA), which is also known as fast track, gives the President authority to negotiate trade agreements which can only be voted up or down, but not amended, by the Congress. TPA strengthens the bargaining position of the President, and the U.S. Trade Representative (USTR), in trade negotiations with other nations.
Proponents of the bill stated that without this authority, the President's bargaining power is limited, and as a result, the U.S. is not a party to most free trade agreements. Opponents said the bill lacked sufficient protections for labor, human rights, and the environment.
House Speaker Denny Hastert (R-IL) stated during the floor debate that "If this vote prevails, the President has the authority to negotiate further trade agreements. That is it. The President still has to bring those agreements back to the Congress for approval. If we don't like those deals, we can still reject them. But if we vote down this legislation, we send a terrible signal to the rest of the world. We say to the world that the Congress will not trust the President to take a lead on trade. We say to the world that the Congress is not interested in promoting trade." He added in his speech that "There are 170 free trade agreements around the world. The United States has been party to two of them. We can either watch from the sidelines or get in the game. Our high-tech communities, our farmers, our manufacturing sector, our exporters, they all want us to get in the game."
Rep. Bill Thomas (R-CA), the Chairman of the House Ways and Means Committee, which has jurisdiction over this bill, led the effort to pass the bill. He led the negotiations with pro-trade Democrats that resulted in the addition of language pertaining to labor rights and the environment that won the support of some Democrats. Thomas also managed the floor debate in support of the bill.
Rep. Cal Dooley (D-CA), Rep. William Jefferson (D-LA), Rep. Bill Tanner (D-TN), and Rep. Jim Moran (D-VA), were the Democrats who actively worked for passage of the bill. Rep. David Dreier (R-CA) also actively promoted the bill. As Chairman of the Rules Committee, he sent the bill to the floor with a rule that did not allow any amendments. Speaker Hastert, and other Republican leaders, rounded up Republican votes for the bill. The entire Democratic leadership opposed the bill. Bush administration officials, especially Commerce Secretary Donald Evans and U.S. Trade Representative Robert Zoellick, lobbied extensively in support of the bill.
USTR Zoellick released a statement after the vote. He said that "Today's vote will help increase momentum for our trade agenda. We are moving forward with the global trade negotiations launched in Doha last month, because we believe it is in America's strong interest to seize the opportunity to further open the world's markets for American farm products, goods, and services. We will press ahead on the practical work to achieve our vision for a Free Trade Area of the Americas."
President Bush also released a statement commending the House. He said that "Trade Promotion Authority will give me the flexibility I need to secure the greatest possible trade opportunities for America's farmers, workers, families, and consumers. Trade Promotion Authority is a key part of our trade agenda. It will help us pursue and complete trade agreements, including the global trade negotiations launched last month in Doha, Qatar."
The bill has yet to pass the Senate. Because of the different make up of the Senate, there is broader support in that body for TPA. Rep. Thomas stated after the vote that "you don't need to worry about a cliff hanger vote in the Senate." However, he added that it remains to be seen if and when the Senate Democratic leadership will bring the bill to the Senate floor vote.
Analysis of the TPA Vote
12/6. The strongest predictor of a Member's vote on the Trade Promotion Authority (TPA) bill was party affiliation. All but 21 Democrats voted against TPA. All but 23 Republicans voted for TPA. The few defections tended to follow regional patterns.
Every Democrat in New England, the Mid Atlantic and Midwest, except Rep. Baron Hill (D-IN), voted against the bill. However, nine Republicans from these northern states broke party ranks and vote against the bill.
Also, in the Southern states facing the Atlantic ocean another 8 Republicans voted against the bill. In contrast, the western part of the South accounted for most of the Democrats who voted for the bill: 5 from Texas, 2 from Louisiana, and one each from Missouri, Arkansas, Tennessee, Kentucky, Oklahoma, and Kansas.
Also, some of the Democrats who crossed over to vote for the bill either represent Mexican border districts, major seaports, or both. These include Norman Dicks (Tacoma), Sue Davis (San Diego and Mexican border), Jim Davis (Tampa), William Jefferson (New Orleans), Ruben Hinojosa (Mexican border), and Solomon Ortiz (Corpus Christi and Mexican border).
The West Coast state members voted almost completely along party lines. None of these Republicans voted against the bill. Only three Democrats voted for the bill: Cal Dooley, Sue Davis, and Norman Dicks.
Technology, IPR and TPA
12/6. Technology companies that export equipment, software, or services, and that seek greater protection abroad for their intellectual property rights, stand to benefit from the enactment of Trade Promotion Authority. Technology companies, and tech groups, such as the Business Software Alliance, advocated passage of the bill.
During the debate on the bill, Members of the House who represent districts with technology companies and workers stressed the importance of TPA for technology trade. Rep. Jennifer Dunn (R-WA), whose Seattle area district is home to many Microsoft workers, stated that "trade promotion authority means strengthening intellectual property standards" and "reducing piracy" abroad. Similarly, Rep. Jay Inslee (D-WA) said that Microsoft's "intellectual property is frequently stolen overseas."
House Minority Leader Dick Gephardt (D-MO) noted that while trade agreements used to be about getting tariffs down, they now cover other things, such as "how do we get intellectual property laws in countries to be enforced."
Nevertheless, members from tech districts, and members who have traditionally been strong supporters of tech, tended to vote along party lines. For example, Rep. Inslee strongly condemned the bill during the debate, and voted against it. Similarly, the members of the Silicon Valley area delegation, who are all Democrats (Anna Eshoo, Zoe Lofgren, Mike Honda, and Ellen Tauscher), voted against the bill. Rep. Rick Boucher (D-VA), a Co-Chair of the Internet Caucus, also voted no. Only a few tech Democrats crossed over to vote for the bill. Rep. James Moran from northern Virginia was one of its most vocal supporters. Rep. Bill Etheridge from the Research Triangle in North Carolina also voted for the bill.
215 to 214
12/6. Legislative votes are frequent, routine, and dull events. The House has held almost 500 roll call votes so far this year. Few of these votes are either close or controversial. The TPA vote was an exception.
Members vote electronically on the floor of the House. Each member has a Vote ID Card which is inserted into a slot. The the Member then pushes a "yes", "no", or "present" button. Votes then appear on a giant electronic board on a wall high above the chamber floor. When someone votes "yes", a green light appears by their name. When someone votes "no", a red light appears. If a Member makes a mistake, or wishes to change a vote, they may do so. The rules also allow Members to vote with paper ballots in the well of the House, just in front of the Speaker's Chair. There is a red ballot for voting "no", and a green ballot for voting "yes". See, House voting procedure.
Speaker Hastert scheduled fifteen minutes for the TPA vote. As the fifteen minutes progressed, the "no" column held a slight lead throughout. Normally, shortly after the end of the time allotted for the vote, the acting speaker asks if there are any more votes, and then closes the vote by banging the gavel. After the end of 15 minutes the "no" votes were still ahead by about 10 votes. Many members had not yet voted, even though they stood in the chamber. Hastert kept the vote open while TPA proponents tried to find more votes. The "no" lead slowly came down as Hastert, Thomas, Dreier, and other TPA proponents schmoozed with wavering Republicans.
After half an hour, Democrats yelled to close the vote. Hastert had his arm around a 27 year old Republican from Florida who had voted "no". But, this freshman would not budge. Dreier sat talking with a fellow Republican from southern California, who would not cast his vote. After 45 minutes Democrats clapped in unison. Hastert prowled the aisles looking for more votes. It was an arm twisting contest, and Hastert was determined to keep the clock running until he was ahead. After an hour, Hastert was still down three votes; no more movement was taking place. But, the House chamber remained packed with Members awaiting the finish.
A dejected Bill Thomas marched down into the well, and grabbed a red ballot. He swung around to face the Republicans. He angrily held the card high over his head. This is a sign of defeat and surrender. (By voting against the proposition he would preserve the option of later bringing a motion for reconsideration.) Others rushed to the well to dissuade him.
Then, a vote switched. On the electric scoreboard, the "yes" votes were down by just one vote. Two wavering Republicans, who had not voted, cast "yes" votes. The scoreboard flashed 215 "yes", to 214 "no". The gavel dropped immediately. Hastert would allow no time for any more vote changes. It was over. TPA passed.
Afterwards, Hastert, Thomas, Dreier, Democrats who voted for the bill, and others, walked out the main front door of the House of Representatives to hold a celebratory press conference in the evening twilight. Secretary of Commerce Donald Evans and USTR Robert Zoellick joined them in front of the Capitol Building. Seattle's Jennifer Dunn proclaimed that this means "increased jobs at Microsoft and the dot coms." Dreier was jubilant. Thomas was emotional; he started to thank the Democrats who actively supported the bill -- Dooley, Tanner, and Jefferson -- and broke down and cried. Hastert said "It is nice to have this bill over."
Senators Hollings and McCain Condemn NextWave Settlement
12/6. Sen. Ernest Hollings (D-SC) and Sen. John McCain (R-AZ) announced their opposition to the proposed settlement agreement in the NextWave matter. See, transcript of December 6 press conference. On November 27 the FCC released the proposed settlement agreement [PDF] between the Federal Communications Commission (FCC), NextWave, the Department of Justice (DOJ), and the Auction 35 winners. The agreement requires approval by the bankruptcy court, and passage of legislation by Congress.
McCain. Sen. McCain, who is the ranking Republican on the Senate Commerce Committee, which has jurisdiction over telecommunications and the FCC, stated that "We want this issue examined in the proper hearing process. We want the FCC to come forward. We want people to come forward and make their case, so the American people can know what's going to happen to billions of their tax dollars here."
Sen. McCain continued that "The principal defects in this process are secrecy and timing. The settlement negotiations have been ongoing for months, as we all know. The 66 page NextWave settlement agreement and its associated enabling legislation ... were sent to the Congress about one week ago, on November 28th. Remarkably -- remarkably -- the terms of this settlement demand that Congress pass this week old legislation and appropriate $6 billion immediately, no later than December 31st. Remarkable. ... Not only do the settling parties demand the Congress and the president enact their legislation according to their short schedule, they also demand that the Congress and the president enact it without any amendments or changes -- not even a comma. This process shows profound contempt for this legislature ..."
Background. 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. 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 proceeding to re-auction the disputed spectrum. NextWave next petitioned the FCC to reconsider its cancellation of its licenses. The FCC refused, and NextWave petitioned for review by the Court of Appeals in the District of Columbia. 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 has petitioned the Supreme Court for writ of certiorari.
Hollings. Sen. Hollings, who is Chairman of the Senate Commerce Committee, was just as critical. However, he has some additional reasons. He agrees with the Second Circuit holding, disagrees with the District of Columbia holding, and wants the FCC to pursue its appeal. His opposition goes to the nature of spectrum licenses. He believes that there are not, and should not be, any property rights in spectrum. He stated that "the public, the people, own the spectrum, and the trustee of the people's spectrum is the Federal Communications Commission. There is no need for legislation. They ought not to be sending legislation; they ought to pursue the appeal. They say it's a 50-50 chance whether or not it will be prevail or not before the Supreme Court. If it doesn't prevail, then we're going to have the court finding that there is an ownership in spectrum, and you can get it ..."
The House Judiciary Committee also held a hearing on the settlement last week. The House Commerce Committee has planned a hearing for Tuesday, December 11.
House Committee Authorizes Cyber Security Funding
12/6. The House Science Committee approved HR 3394, the Cyber Security Research and Development Act, by a unanimous voice vote. The bill, which is sponsored by Rep. Sherwood Boehlert (R-NY) and others, would authorize the funding of new research and education programs pertaining to cyber security.
Rep. Boehlert stated at the committee meeting that "Experts from industry, government and academia have told us that we simply do not have enough people conducting enough promising research on how to protect our computers and networks." He added that currently the federal government spends about $60 Million on cyber security research. He called this a "pittance". HR 3394 calls for additional funding of about $800 Million over five years.
The money would go to a variety of research and education projects. The bill contains new or additional funding for five National Science Foundation (NSF) programs. First, it would authorize appropriations of $233 Million over 5 years to the NSF to make "network security research grants". Second, it would authorize $144 Million over 5 years to the NSF to award to universities "to establish multi disciplinary Centers for Computer and Network Security Research." These programs would fund research regarding "authentication and cryptography; ... computer forensics and intrusion detection; ... reliability of computer and network applications, middleware, operating systems, and communications infrastructure; and ...privacy and confidentiality."
The bill would also authorize funding to be administered by the NSF for training undergraduate university students ($95 Million), community college students ($6 Million), and doctoral students ($90 Million) in cyber security fields.
The bill also authorizes funding for programs at the National Institute of Standards and Technology (NIST). One item authorizes $275 Million for NIST to assist universities that partner with for profit entities in long term, high risk, cyber security research. Another item authorizes $32 Million for in house research at NIST.
Rep. Eddie Johnson (D-TX) offered an amendment that she said would "keep in mind the historical black colleges" and hispanic colleges. Rep. Boehlert said he shared her concern, and "we will work cooperatively and do something from the floor." Rep. Johnson then withdrew her amendment.
Rep. Boehlert stated that he expects the bill to be voted on by the full house early next year. A companion bill has not yet been introduced in the Senate.
House Committee Passes Bill Authorizing Funding for Info Tech R&D
12/6. The House Science Committee passed HR 3400, the Networking and Information Technology Research Advancement Act, by a unanimous voice vote. This bill, which is sponsored by Rep. Nick Smith (R-MI) and others, would authorize appropriations totaling nearly $7 Billion over five years for information technology research and development.
Most of the funding authorized by this bill would go to the National Science Foundation (NSF), Department of Energy's Office of Science, and National Aeronautics and Space Administration (NASA).
The Committee passed an amendment by unanimous voice vote that was offered by Rep. James Matheson (D-UT) that adds a new section to the bill creating a "Crisis Management Enabling Technology Center."
Rep. John Larson (D-CT) also offered an amendment, which he withdrew. Rep. Sherwood Boehlert (R-NY), the Chairman of the Committee, stated that "we will continue to work together" on this matter. The amendment would add a new section to the bill authoring funding for "Broadband Demonstration Projects."
NTIA Chief Discusses Broadband
12/6. NTIA chief Nancy Victory gave a speech titled "Removing Roadblocks to Broadband Deployment" at a conference of the Competition Policy Institute in Washington DC. She stated that "The question is -- what are the right policies to ensure broadband services develop and are made available in a manner that best benefits our country?" However, she did not answer her question.
GAO Reports on E-Commerce and Taxes
12/6. The GAO released a letter [PDF] to Sen. Max Baucus (D-MT) and Sen. Charles Grassley (R-IA) dated November 6, 2001, regarding state and local revenue loss from Internet sales. The two Senators asked the GAO to determine whether the Census Bureau's estimates of e-commerce in 1999 provide a basis for revising the GAO's 2000 report on sales tax losses from e-commerce. The GAO concluded that it could not update its 2000 report because Census Bureau's definition of e-commerce is broader than Internet sales. See also, GAO report [PDF] of June 30, 2000, titled "Sales Taxes: Electronic Commerce Growth Presents Challenges; Revenue Losses Are Uncertain."
SEC Chief Accountant Addresses Reporting and Disclosure
12/6. Robert Herdman, Chief Accountant of the SEC gave a speech in Washington DC to the American Institute of Certified Public Accountants regarding accounting and financial disclosure. He stated that "Our existing system of financial reporting and disclosure was developed back in the 1930s and is showing its age. During the last 70 years, technology has advanced to a point where computers and the Internet are a part of our everyday lives. But relatively few changes have been made to the Commission's rules regarding what financial information is disseminated and how it is communicated. As a result, it seems like no better time exists than now to consider modernizing the system. So, we will take a fresh look, one that is no-holds barred in terms of being open to new ideas."
Unger Issues Recommendations on SEC Regulation FD
12/6. SEC Commissioner Laura Unger released a report titled "Special Study: Regulation Fair Disclosure Revisited". The SEC adopted the controversial Regulation FD on August 10, 2000. It requires that when an issuer discloses material information, it must do so publicly.
Unger's report recommends that the SEC should make it easier for issuers to use technology to satisfy Regulation FD. The SEC should expand opportunities for issuers to disseminate information online, such as through web sites, web casts, and e-mail alerts. She also recommended that the SEC should provide more guidance on materiality, and that the SEC should analyze what issuers are saying.
Senate Committee Holds Hearing on Anti Terrorism Policies
12/6. The Senate Judiciary Committee held another hearing in its ongoing series of hearings titled "DOJ Oversight: Preserving Our Freedoms While Defending Against Terrorism." Attorney General John Ashcroft testified in support of the Bush administration's anti terrorism policies. He stated in his prepared testimony that "We have used the provisions allowing nationwide search warrants for e-mail and subpoenas for payment information. And we have used the Act to place those who access the Internet through cable companies on the same footing as everyone else." See also, opening statement of Sen. Patrick Leahy (D-VT), Chairman of the Committee, and opening statement of Sen. Orrin Hatch (R-UT), the ranking Republican.
FCC Closes Library to the Public
12/6. The FCC released a notice in which it stated that "Effective December 5, 2001, and until further notice, the FCC Library will be closed to the public. This action is necessary because the Commission is using a portion of the FCC Library to house FCC employees temporarily."
30th Nation Accedes to WIPO Copyright Treaty
12/6. The nation of Gabon acceded to the World Intellectual Property Organization (WIPO) Copyright Treaty (WCT). Gabon is only the 30th nation to do so. However, this accession means that the WCT will enter into force in three months -- on March 6, 2002. The other nations which have acceded are Argentina, Belarus, Bulgaria, Burkina Faso, Chile, Colombia, Costa Rica, Croatia, Czech Republic, Ecuador, El Salvador, Gabon, Georgia, Hungary, Indonesia, Japan, Kyrgyzstan, Latvia, Lithuania, Mexico, Panama, Paraguay, Peru, Republic of Moldova, Romania, Saint Lucia, Slovakia, Slovenia, Ukraine, and U.S. See, WIPO release and State Department release.
Trade Promotion Authority Vote Today
12/6. The House is scheduled to debate and vote on HR 3005, the Bipartisan Trade Promotion Authority Act of 2001 on Thursday, December 6. This bill would give the President fast track trade negotiating authority. The House Rules Committee adopted a closed rule late on Wednesday, December 5, for consideration of the bill. The rule provides for consideration of a manager's amendment [PDF], which includes numerous additional provisions, including language pertaining to labor rights, trade in textiles, and agriculture.
Bills Introduced
12/6. Rep. Peter Defazio (D-OR) introduced HR 3422, a bill to establish a Congressional Trade Office. It was referred to the House Ways and Means Committee.
12/6. Sen. Joe Biden (D-DE) and Sen. Jesse Helms (R-NC) introduced S 1779, a bill to authorize the establishment of Radio Free Afghanistan. It was referred to the Senate Committee on Foreign Relations.
People and Appointments
12/6. Rob Stoddard will join the National Cable & Telecommunications Association (NCTA) as SVP for Communications and Public Affairs, effective January 2, 2002. He is currently SVP for Public Relations at AT&T Broadband. See, NCTA release.
12/6. The law firm of Fulbright & Jaworski announced new partners, effective January 1, 2002. The list includes Lucas Elliot, who focuses on general commercial and complex tort litigation, with a concentration on information technology and telecommunications litigation. See, F&J release.
More News
12/6. The The U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in Channel 32 Hispanic v. FCC, No. 00-1527.
12/6. The FBI's National Infrastructure Protection Center (NIPC) issued an updated advisory regarding the mass mailing worm called "Goner".
12/6. The House Judiciary Committee's Subcommittee on Commercial and Administrative Law and Subcommittee on Courts, the Internet, and Intellectual Property held a joint hearing on the proposed settlement agreement between NextWave, the FCC, the DOJ, and the Auction 35 winning bidders. See, prepared testimony of Jay Bybee (DOJ), John Rogovin (FCC), Donald Verrilli (NextWave), and Stephen Roberts (Eldorado Communications).
12/6. The NTIA held the first session of a two day conference regarding its grant program named "Technology Opportunities Program", or TOP. See, agenda. Nancy Victory, head of the NTIA, gave introductory remarks.
12/6. The House passed HR 3008, a bill to reauthorize the trade adjustment assistance program under the Trade Act of 1974, by a vote of 420 to 3. See, Roll Call No. 477.

Go to News Briefs from December 1-5, 2001.