News from January 6-10, 2003

Bush To Nominate McQueary for Science and Technology Position at DHS

1/10. President Bush announced his intent to nominate Charles McQueary to be Under Secretary for Science and Technology at the Department of Homeland Security (DHS). See, White House release.

McQueary is a recently retired President of General Dynamics, a defense contractor. Before that, he worked for AT&T/Lucent Technologies from 1987 through 1997, as President and Vice President. And before that, he worked for AT&T Bell Laboratories from 1971 through 1987. He is also a former member of the Board of Directors of the National Defense Industrial Association. He has three degrees, in engineering, mechanical engineering, and engineering mechanics, all from the University of Texas.

Rep. Sherwood Boehlert (R-NY), the Chairman of the House Science Committee, stated in a release that "I'm extremely pleased with this appointment and that the President has moved so rapidly. The Science Committee wrote the portion of the Homeland Security legislation creating the Undersecretary for Science and Technology and Dr. McQueary is exactly the kind of individual we hoped would fill this critical position. He has a strong technical background, broad management experience, familiarity with both academia and industry, and is highly regarded in the scientific community. I look forward to working with Dr. McQueary to ensure that the federal government invests in the science and technology necessary to combat terrorism over the long term."

The Homeland Security Act, which the Congress passed, and the President signed, late last year, creates two directorates, both headed by an Under Secretary, that have science and technology responsibilities. First, there is the Title II Directorate for Information Analysis and Infrastructure Protection, which has primary responsibility for information sharing and cyber security matters. Second, there is the Title III Directorate for Science and Technology, which has primarily responsibility for chemical, biological, radiological, and nuclear threats. However, the responsibilities of the Title III Directorate include supporting the Title II Directorate "by assessing and testing homeland security vulnerabilities and possible threats". McQueary has been nominated to head this Title III position.

The new position of Under Secretary for Science and Technology was created by the Homeland Security Act. See, HR 5005 of the 107th Congress, at Title III, §§ 301-313. Title III pertains to "science and technology in support of homeland security". The Under Secretary's responsibilities include "advising the Secretary regarding research and development efforts and priorities in support of the Department's missions" and "developing, in consultation with other appropriate executive agencies, a national policy and strategic plan for, identifying priorities, goals, objectives and policies for, and coordinating the Federal Government's civilian efforts to identify and develop countermeasures to chemical, biological, radiological, nuclear, and other emerging terrorist threats ..." (See, § 302.)

Title III does not encompass cyber security, computer crimes, information analysis, or information sharing. Title II of the Act, which pertains to "information analysis and infrastructure protection", does cover these subjects. It creates the new position of Under Secretary for Information Analysis and Infrastructure Protection, the responsibilities of which include developing "a comprehensive national plan for securing the key resources and critical infrastructure of the United States, including power production, generation, and distribution systems, information technology and telecommunications systems (including satellites), electronic financial and property record storage and transmission systems, emergency preparedness communications systems, and the physical and technological assets that support such systems." (Parentheses in original.)

The Homeland Security Act also provides (in Title II, at § 231) that "There is hereby established within the Department of Justice an Office of Science and Technology". This office will handle "law enforcement technology".

The Homeland Security Act also provides (in Title III, at § 302) that the Under Secretary for Science and Technology's (i.e., McQueary's) responsibilities include "supporting the Under Secretary for Information Analysis and Infrastructure Protection, by assessing and testing homeland security vulnerabilities and possible threats".

See also, White House summary of Title II and  White House summary of Title III.

FCC Seeks Comments on Cable TV Plug and Play MOU

1/10. The Federal Communications Commission (FCC) announced, but did not release, a Further Notice of Proposed Rulemaking (FNPRM) regarding a proposed set of rules pertaining to "plug and play" cable compatibility.

On December 19, fourteen consumer electronics companies and seven cable operators announced that they have entered into a Memorandum of Understanding (MOU) regarding a national plug and play standard between digital television (DTV) products and digital cable systems. See, document [78 pages in PDF] consisting of the MOU, proposed rules to be promulgated by the FCC, and a letter to FCC Chairman Michael Powell and others.

The FCC stated in a release [MS Word] that it adopted this FNPRM on January 7. Comments in response to this FNPRM are due by March 28, 2003. Reply comments are due by April 28, 2003. This is CS Docket 97-80, and PP Docket 00-67.

The FCC's release states that "proceeding seeks comment on proposed rules for ``plug and play´´ cable compatibility, which is a key piece of the digital television puzzle. In a ``plug and play´´ world, consumers will be able to plug their cable directly into their digital TV set without the need of a set-top box. On December 19, 2002, the cable and consumer electronics industries filed a Memorandum of Understanding (MOU) which details an agreement on a cable compatibility standard for an integrated, one-way digital cable television receiver, as well as other unidirectional digital cable products. The industries assert that unidirectional digital cable television receivers manufactured pursuant to the MOU would be capable of receiving analog basic, digital basic and digital premium cable television programming by direct connection to a cable system providing digital programming. Due to the unidirectional nature of this receiver specification, an external navigation device will still be needed to receive advanced features such as cable operator-enhanced electronic programming guides, impulse pay per view or video on demand. The MOU indicates that the industries continue to work on a bidirectional receiver specification that would eliminate the need for an external navigation device to receive advanced services."

For more information, contact Susan Mort in the FCC's Media Bureau at 202 418-7200 or

11th Circuit En Banc Reverses Panel in Reciprocal Compensation Case

1/10. The U.S. Court of Appeals (11thCir) issued its divided en banc opinion in BellSouth v. MCIMetro, a case regarding interconnection agreements, reciprocal compensation for calls to ISPs, state jurisdiction, and federal jurisdiction. The en banc Court concluded that a state telecom regulator has authority to construe interconnection agreements to determine whether calls to ISPs are local calls for the purpose of reciprocal compensation, that federal courts have jurisdiction to review these determinations, and that, in the present case, a three judge panel will hear the merits of an appeal from a District Court determination affirming a state regulator's orders construing such interconnection agreements. That is, the en banc panel resolved the jurisdictional questions. The case now goes back to a new three judge panel for resolution on the merits.

Background. Section 251(b)(5) of the 1996 Act provides that local phone companies compensate each other for handling each other's local calls. One telephone company pays another telephone company for each local call the second company completes to one of its customers.

If one person whose local phone company is the ILEC makes a local phone call to another person whose local phone company is a competitive local exchange carrier (CLEC), the CLEC is entitled to compensation from the ILEC for completing the call. The same is the case if the call originates with the CLEC and completes with the ILEC. Hence, it is called "reciprocal compensation."

Disputes have arisen in the context of calls made from ILEC customers to CLECs that provide Internet service. The CLECs request reciprocal compensation from the ILECs. The ILECs assert that these calls are not "local". ILECs, such as BellSouth, further argue that there is no reciprocity, because while people place calls to connect to the Internet, the Internet never calls them back.

This case involves disputes over reciprocal compensation. BellSouth and MCImetro entered into an interconnection agreement, as required by the Telecom Act of 1996. So did BellSouth and WorldCom. BellSouth then decided not to pay reciprocal compensation for calls to ISPs. MCImetro and WorldCom argued that calls made to an Internet Service Provider (ISP) are local traffic subject to reciprocal compensation under the interconnection agreements. BellSouth asserted that they are not.

GPSC Proceeding. MCImetro and WorldCom sought relief from the Georgia Public Service Commission (GPSC). The GPSC issued two orders construing these to interconnection agreements. It decided that the calls were local traffic.

District Court. BellSouth then filed a complaint in U.S. District Court (NDGa) alleging that the GPSC order was contrary to federal law. BellSouth alleged that subject matter jurisdiction was based upon both 47 USC §252(e)(6) and 28 USC §1331 (federal question jurisdiction). The District Court affirmed the GPSC.

Three Judge Panel of the 11th Circuit. BellSouth filed an appeal with the U.S. Court of Appeals (11thCir). A divided three judge panel of the Court of Appeals issued its opinion on January 10, 2002, reversing the District Court on jurisdictional grounds, rather than on the merits. The majority held that the GPSC had no statutory authority to interpret the interconnection agreements, and the District Court lacked jurisdiction. Judge Tjoflat wrote the opinion of the Court, and Judge Barkett dissented. He concluded that the District Court had jurisdiction under Section 252.

En Banc Opinion. MCImetro and WorldCom then petitioned for rehearing en banc, which petition was granted. In the just issued en banc opinion of the Court of Appeals, the Court concluded that the GPSC has authority under federal law to interpret and enforce the interconnection agreements at issue and that its determination is subject to review in the federal courts. The Court also referred "all other issues to a panel of this Court and instruct the Clerk of the Court to assign this case to the next available oral argument panel to resolve the merits of this case".

Judge Barkett (who dissented from the opinion of the three judge panel) wrote the opinion for the en banc panel. Judge Tjoflat (who wrote the opinion of the three judge panel) wrote an 60 page dissent to the opinion of the en banc panel.

Tech Crime Report

1/10. Michael Kimble was sentenced in U.S. District Court (EDVa) to 12 months imprisonment for identity theft. The U.S. Attorneys office stated in a release that Kimble "used the names, birth dates and Social Security numbers of six other people to open credit card and bank accounts in their names over the Internet. To maintain control over the accounts, the defendant used a commercial maildrop in Woodbridge as the address for the accounts. Kimble then transferred his own personal debts to the credit cards he had illegally obtained. ... he had transferred nearly $50,000 of his own debts and expenses to credit cards in the names of his victims." The USAO further stated that Kimble, a recruiting captain in the U.S. Army, opened accounts in the names of a subordinate at work, and a prospective recruit. He obtained personal information at work.

1/10. The U.S. Attorneys Office (USAO) filed a criminal complaint in the U.S. District Court (NDCal) charging Qing Chang Jiang with illegally exporting dual use (i.e., both commercial and military) technology to the People's Republic of China in violation of 50 U.S.C. § 1705(b). The complaint was filed under seal on January 8. Jiang was arrested, and the complaint was unsealed, on January 10. The USAO stated in a release that Jiang is charged with exporting microwave amplifiers to The 54th Research Institute in the PRC.

People and Appointments

1/10. Phil Bond, who is currently both Chief of Staff to Commerce Secretary Don Evans and Under Secretary of Commerce for Technology will cease being Chief of Staff for Evans. He will work full time as head of the Technology Administration (TA). The new Chief of Staff to Evans will be Alison Kaufman. She is currently Chief of Staff to Deputy Commerce Secretary Sam Bodman. See, TA release.

1/10. President Bush announced his intent to nominate Michael Brown to be Under Secretary for Emergency Preparedness and Response at the Department of Homeland Security (DHS). He is currently the Deputy Director of the Federal Emergency Management Agency (FEMA). He was previously the Executive Director of the Independent Electrical Contractors. See, White House release.

1/10. President Bush nominated Clark Ervin to be Inspector General of the new Department of Homeland Security (DHS). He also nominated former Rep. Asa Hutchinson (R-AK) to be Under Secretary for Border and Transportation Security in the new DHS. See, White House release. The President's intent to make these nominations had previously been announced.

More News

1/10. The Department of Justice (DOJ) filed with the U.S. District Court (DC) a memorandum in opposition to the motion of the Consumers for Computing Choice (CCC) for leave to intervene to appeal in the government antitrust action against Microsoft. The DOJ also filed a memorandum in opposition to a similar motion filed by Robert Litan, an economist based in Washington DC. And, last week, the DOJ filed its memorandum in opposition to a substantially similar motion [25 pages in PDF] filed by the Computer & Communication Industry Association (CCIA) and the Software & Information Industry Association (SIIA). The basis of the opposition is the same for all motions. None of these people or groups is a party to the case, and therefore, they lack standing to appeal.

1/10. President Bush signed into law HJRes 1, which provides further continuing appropriations for activities of the federal government through Friday, January 31, 2003. See, White House release.

District Court Squeezes Sharman on Internet Based Personal Jurisdiction

1/9. The U.S. District Court (CDCal) issued an order and opinion in MGM v. Grokster in which it denied Sharman Network's motion to dismiss for lack of personal jurisdiction. Sharman, which now owns the key assets of Kazaa, is organized in the offshore jurisdiction of Vanuatu, apparently for the purpose of evading the reach of U.S. courts. Sharman provides free software, known as the Kazaa Media Desktop (KMD), that can be downloaded and used to search for and exchange digital music, movies, and other mostly copyrighted works, using FastTrack file sharing technology. The Court based its finding of personal jurisdiction largely on the fact that Sharman had made the KMD software available to about two million residents of the state of California. See, full story.

Senate Organizational News

1/9. As expected, on January 7, Sen. Bill Frist (R-TN) was formally selected Senate Majority Leader, and Sen. Ted Stevens (R-AK) was elected President Pro Tempore of the Senate.

Sen. Trent Lott (R-MS), who had previously been the Senate Majority Leader, will be the Chairman of the Rules and Administration Committee. This is not one of the important Committees; the most significant item within its jurisdiction is election law. However, he will also continue as a member of the Senate Commerce Committee. He will chair its Aviation Subcommittee. He is also a member of the Senate Finance Committee.

Commerce Committee. The change of majority control of the Senate may have a significant effect on technology related policy areas that fall within the jurisdiction of the Senate Commerce Committee. Sen. John McCain (R-AZ) will resume his chairmanship of the Committee, and Sen. Ernest Hollings (D-SC) will once again be the ranking Democrat. Sen. Conrad Burns (R-MT) will again chair the Communications Subcommittee, replacing Sen. Hollings.

Sen. Hollings has been the Senate's leading opponent of the Tauzin Dingell bill, and any other legislation to provide regulatory relief to the Bell companies. He has also sought to restrain FCC Chairman Michael Powell's market oriented approach to regulation.

Sen. Hollings is also the sponsor of S 2048, the Consumer Broadband and Digital Television Promotion Act, a bill to mandate copy protection technology. He is also a cosponsor of Sen. Joe Biden's (D-DE) bill, S 2395, the Anticounterfeiting Amendments of 2002.

Newly elected Sen. John Sununu (R-NH) has been appointed to the Committee.

Two Democrats who were on the Commerce Committee in the 107th Congress lost their re-election bids. Former Sen. Jean Carnahan (D-MO) lost to Sen. Jim Talent (R-MO). Former Sen. Max Cleland (D-GA) lost to Sen. Saxby Chambliss (R-GA). One Democrat has yet to be named to the Commerce Committee for the 108th Congress.

Judiciary Committee. The change of control of the Senate will have major consequences for the output of the Senate Judiciary Committee. However, these changes will primarily be in the confirmation of judicial appointees and social policy. In contrast, Democrats and Republicans on the Committee have not differed sharply on intellectual property or antitrust issues.

Sen. Orrin Hatch (R-UT) will once again chair the Committee. Sen. Patrick Leahy (D0-VT) will be ranking Democrat.

Sen. Sam Brownback (R-KS) who was a member of the Committee in the 107th Congress, is not on the list of members for the 108th Congress. He was a cosponsor in the 107th Congress of S 2031, the Intellectual Property Protection Restoration Act of 2002. This is the latest version of Sen. Leahy's proposal to stop states from evading liability for infringing intellectual property rights by asserting 11th Amendment immunity.

Former Sen. Robert Torricelli (D-NJ), who was a member of the Committee, has retired. Newly elected Sen. John Sununu (R-NH) has been appointed to the Committee.

Finance Committee. The Chairmanship of the Senate Finance Committee will switch back from Sen. Max Baucus (D-MT), to Sen. Charles Grassley (R-IA). However, on technology related issues that fall within the jurisdiction of the Committee, the two have not diverged. Both, for example, worked for passage of trade promotion authority legislation.

There is considerable turnover in the Committee's membership. Three Republicans left the Committee. Former Sen. Frank Murkowski (R-AK) was elected Governor of Alaska, and resigned. Former Sen. Phil Gramm (R-TX) and former Sen. Fred Thompson (R-TN) both retired. Four new Republicans have been named to the Committee: Sen. Rick Santorum (R-PA), Sen. Bill Frist (R-TN), Sen. Gordon Smith (R-OR), and Sen. Jim Bunning (R-KY).

Former Sen. Robert Torricelli (D-NJ), who was a member of the Committee, has retired. No more Democrats have been added to the Committee for the 108th Congress.

Other Committees. Sen. Stevens will once again be Chairman of the Senate Appropriations Committee, while Sen. Robert Byrd (D-WVa) will revert to ranking Democrat.

Sen. Richard Shelby (R-AL) will be the Chairman of the Senate Banking Committee, replacing Sen. Paul Sarbanes (D-MD). The previous Republican Chairman, former Sen. Phil Gramm (R-TX), retired. This Committee has jurisdiction over export control laws. Sen. Mike Enzi (R-WY), a member of the Committee, won re-election in November. He has already announced that he will reintroduce legislation to modernize export control laws. See, S 149 (107th Congress), the Export Administration Act of 2001.

Sen. Pete Domenici (R-NM), who had been Chairman of the Senate Budget Committee, will be the new Chairman of the Senate Energy and Natural Resources Committee.

Sen. Don Nickles (R-OK) will be the Chairman of the Senate Budget Committee.

Sen. Grassley Writes FBI Re FISA Warrants

1/9. Sen. Charles Grassley (R-IA) wrote a letter to Federal Bureau of Investigation (FBI) Director Robert Mueller in which he expressed his concern that the FBI recently gave an award for "meritorious service", and a monetary bonus, to Spike Bowman, who is Deputy General Counsel.

Sen. Charles GrassleySen. Grassley (at right) wrote that Bowman "who is in charge of the FBI's National Security Law Unit, has a great deal of authority at the FBI over the use and processing of warrants sought under the Foreign Intelligence Surveillance Act (FISA), one of the FBI's most important tools against terrorists." Sen. Grassley continued that Bowman had played a role in denying the request for a FISA warrant for Zaracarias Moussaoui prior to the terrorist attacks of September 11, 2001.

Sen. Grassley concluded that "By granting this award and a monetary bonus, you are sending the wrong signal to those agents who fought -- sometimes against senior FBI bureaucrats at headquarters -- to prevent the attacks. This also fits with a disturbing pattern of rewarding wrongdoing or mistakes by top officials at the FBI that I hoped would end during your tenure. Also, you have said that the FBI must admit its mistakes, but it seems that is not happening in this case."

Sen. Grassley is a senior member of the Senate Judiciary Committee, which oversees the FBI and Department of Justice.

Sen. Edwards Proposes Including Internet in Emergency Warning System

1/9. Sen. John Edwards (D-NC) and Sen. Ernest Hollings (D-SC) introduced S 118, The Emergency Warning Act of 2003, a bill to expand the national emergency warning system. It was referred to the Senate Commerce Committee, of which both are members.

Sen. Edwards spoke in the Senate in support of this bill. He said that "In the event of a terrorist attack or natural disaster, Americans must know how to respond. In the first terrible hours on September 11, 2001, in Washington, in New York, and across the country, most of us didn't know what to do." He said that "the first thing we need to do is to update our emergency warning system." See, Cong. Rec., January 9, 2002,  at S153-4.

Sen. John EdwardsSen. Edwards (at right) issued a release that states that "The Commerce Department would be responsible for developing new technologies to issue warnings, modeled on the existing system used by the department's National Weather Service. Commerce also would oversee research into new tools for disseminating warnings to more people, including the Internet, cell phones, special rings on traditional telephones and new television technology to activate sets that are not turned on." Sen. Edwards also released a summary of the bill which contains similar language.

He also elaborated in his Senate statement that "There are a lot of things the system could do using existing technology. For example, it could alert Americans in their homes through a special phone ring. These warnings could reach people as they sleep in their homes. For people on the move, the system could use cell phones, which can already be programmed to broadcast emergency warnings to all users in a certain area -- even if those folks are just passing through. Pagers and beepers can achieve the same result. Televisions can be programmed to come on automatically and provide alerts in the event of a disaster."

The National Weather Service (NWS) is a part of the National Oceanic and Atmospheric Administration (NOAA) which is a part of the Department of Commerce (DOC). However, the Emergency Alert System (EAS) is controlled by the Federal Communications Commission (FCC), which is independent of the DOC.

The U.S. for a long time had an Emergency Broadcast System (EBS). It was replaced in 1994 by the Emergency Alert System (EAS). The EAS is covered by Part 11 of the Rules of the FCC. See, 47 C.F.R. §§ 11.1, et seq. Currently, all broadcast stations, cable systems and  wireless cable systems are required to install EAS equipment, although there is an exception for nonparticipating national sources.

The FCC updated its EAS rules in February of 2002. See, Report and Order in the proceeding titled "In the Matter of Amendment of Part 11 of the Commission's Rules Regarding the Emergency Alert System". This is EB Docket
No. 01-66. In its discussion of programmed channels of wireless cable systems the FCC's Report and Order makes clear that "Programmed channels do not include channels used for the transmission of data services such as Internet."

Rep. Honda Introduces Nanotechnology Bill

1/9. Rep. Mike Honda (D-CA) introduced HR 283, the Nanoscience and Nanotechnology Advisory Board Act of 2003. It was referred to the House Science Committee, of which he is a member. Rep. Honda also introduced a similar bill last fall, HR 5669 (107th).

Rep. Honda (at right) stated in a release that "The nanotechnology industry could become one of the new engines of our economy, and will have a dramatic impact on society ... It is of utmost importance that the United States lead in the development of the nanotechnology industry. My legislation will make sure that the federal government has an aggressive, achievable, and measurable plan."

The bill provides that "There is established the Nanoscience and Nanotechnology Advisory Board (in this Act referred to as the ``Advisory Board´´). The Advisory Board shall operate in coordination with the White House Office of Science and Technology Policy, and shall provide advice to the President and the National Science and Technology Council on research investment policy, strategy, program goals, and management processes relating to nanoscience and nanotechnology."

The bill is cosponsored by Rep. Sheila Lee (D-TX), Rep. Ellen Tauscher (D-CA), Rep. Rush Holt (D-NJ), Rep. Eddie Bernice Johnson (D-TX), Rep. Joe Hoeffel (D-PA), Rep. Zoe Lofgren (D-CA), and Rep. Bob Etheridge (D-NC).

More New Bills

1/9. Sen. Jon Kyl (R-AZ) introduced S 113 and S 123, bills to exclude United States persons from the definition of "foreign power" under the Foreign Intelligence Surveillance Act (FISA). The bills were referred to the Senate Judiciary Committee, of which he is a member.

Court Opinions

1/9. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Oakley v. Sunglass Hut, a patent infringement case involving the sunglasses lens technology. The U.S. District Court (CDCal) granting Oakley a preliminary injunction on its claim of infringement of its U.S. Patent No. 5,054,902. The Appeals Court affirmed.

1/9. The U.S. District Court (DC) issued a Memorandum Opinion [PDF] in McPeek v. Ashcroft regarding discovery of electronic evidence. See also, McPeek v. Ashcroft, 202 F.R.D. 31 (D.D.C. 2001).

1/9. The U.S. Court of Appeals (8thCir) issued its opinion [11 pages in PDF] in Daimler Chrysler v. Bloom, a trademark case involving the licensing of 1-800 numbers. Bloom is a former Mercedes dealer who used the vanity number 1-800-637-2333. This is one of many numbers that corresponds to 1-800-MERCEDES. He is no longer a Mercedes dealer, but his licensing company, MBZ, licenses use of this number to Mercedes dealers around the country for use in their area codes. Daimler Chrysler and Mercedes filed a complaint against Bloom and MBZ in U.S. District Court (DMinn) alleging that this licensing violates the Lanham Act, the Federal Trademark Dilution Act, and state trademark and unfair competition laws. The District Court granted summary judgment to Bloom and MBZ. The Appeals Court affirmed. It held that "the licensing of a toll-free telephone number, without more, is not a ``use´´ within the meaning of the Lanham Act, even where one possible alphanumeric translation of such number might spell-out a protected mark."

1/9. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Homedics v. Valley Forge Insurance Company, a case regarding an insurer's duty to defend its insured in a patent infringement case under a commercial general liability policy, with personal injury and advertising injury clauses. Homedics was sued for patent infringement. Homedics file two actions in U.S. District Court (CDCal) against various insurers for breach of contract, and for a declaration of duty to defend. An insurer filed a Rule 12(b)(6) motion to dismiss for failure to state a claim. The District Court granted the motion. Homedics appealed. The Court of Appeals affirmed. Patent infringement claims are not an advertising injury.

People and Appointments

1/9. President Bush announced his intent to nominate Christopher Henry to be Deputy Under Secretary of Defense for Policy. He is currently the Corporate VP for Strategic Assessment and Development at Science Applications International Corporation (SAIC). Before that, he was a Senior Fellow at the Center for Strategic and International Studies (CSIS), where he worked on the "Information-based Warfare initiative" and the "Conflict in the Digital Age Project." See, White House release.

1/9. President Bush nominated seven persons to be members of the National Science Foundation's (NSF) National Science Board: Barry Barish, Steven Beering, Kenneth Ford, Daniel Hastings, Elizabeth Hoffman, Douglas Randall, and Jo Anne Vasquez. See, White House release. Back on October 17, 2002, President Bush announced his intent to nominate eight persons to be member of this Board. Elizabeth Hoffman was not on the 2002 list. In addition, that list also included the names of Ray Bowen and Delores Etter, neither of whom is on the January 9 list of actual nominees. See White House release of October 17.

1/9. President Bush nominated Charlotte Lane and Daniel Pearson to be members of the U.S. International Trade Commission (USITC). See, White House release.

1/9. President Bush nominated Michael Toner and Ellen Weintraub to be members of the Federal Election Commission (FEC). Weintraub received a recess appointment late last year. See, White House release.

1/9. President Bush announced his intent to nominate Paul McHale to be Assistant Secretary of Defense for Homeland Defense. McHale was a member of the House of Representatives from 1993 through 1999. He is currently VP of Tallman, Hudders and Sorrentino. See, White House release.

More News

1/9. 24/7 Real Media, Inc. and ValueClick, Inc. announced that they have "amicably settled" a patent lawsuit involving 24/7's U.S. Patent No. 6,026,368, titled "On-line interactive system and method for providing content and advertising information to a targeted set of viewers". 24/7 filed a complaint in U.S. District Court (SDNY) last against ValueClick and Mediaplex. The parties announced that 24/7 will license its patent to ValueClick and Mediaplex "in exchange for a payment", but that "All terms of the agreement are confidential." See, 24/7 release.

1/9. The Progress and Freedom Foundation (PFF) released a report [23 pages in PDF] titled "The FCC and Telecom Recovery: A Scorecard for Evaluating the New Rules". The report, which was written by the PFF's Randall May, argues, among other things, that "Unbundling And Sharing Should Not Be Required For Newly Installed Fiber Or Other Non-Copper Facilities" and "Regardless Of Technology Platform, Broadband Services Should Not Be Subject To Unbundling and Sharing Requirements Or Computer-II-Type Separation Requirements".

1/9. The Competitive Telecommunications Association (CompTel) submitted a comment [huge MS Word file] to the Office of U.S. Trade Representative (USTR) for its annual Section 1377 (19 U.S.C. § 3106) review of the operation and effectiveness of all U.S. trade agreements regarding telecommunications products and services. CompTel states that it urges the USTR "to work aggressively with the Governments of Australia, Brazil, China, France, Germany, India, Italy, Japan, Mexico, The Netherlands, Singapore, South Africa, Switzerland, and Taiwan to open their markets for competition and to ensure fair and non-discriminatory market conditions in accordance with their respective international trade commitments." See also, CompTel release.

Chris Cox to Chair New House Homeland Security Committee

1/8. The House will continue the new Select Committee on Homeland Security. Its Chairman will be Rep. Chris Cox (R-CA).

On November 25, 2002, President Bush signed HR 3005 (Public Law No: 107-296), the bill creating the new Department of Homeland Security.

Chris CoxCox (at right) issued a release which states that "With the enactment of the historic legislation creating the Department of Homeland Security, the immediate focus of the Select Committee will be to work with the President to implement the new law. The Select Committee's oversight will be devoted to getting the new Department up and running as quickly and efficiently as possible. The Committee has exclusive legislative jurisdiction over all matters relating to the Homeland Security Act and will be a crucial influence in shaping America's security future."

Rep. Cox was first elected to the Congress in 1988, and has since focused on technology, foreign affairs, and trade issues. He has generally been a low taxes, deregulation, free enterprise, and free trade type of Republican. He has been Chairman of the Republican's House Policy Committee since 1995. He is a senior member of the House Commerce Committee, and its Telecom Subcommittee. He is also a member of the House Financial Services Committee. Rep. Cox will retain his positions with the House Policy Committee and the House Commerce Committee.

Since the 105th Congress, he has been the leader in the House of efforts to pass legislation to place a moratorium on new or discriminatory state taxes on electronic commerce. On January 7, he introduced legislation to make the ban permanent. Sen. Ron Wyden (D-OR) introduced the companion bill in the Senate. Rep. Cox has opposed what he has seen as FCC efforts to expand Federal Communications Commission (FCC) regulation from telecommunications to the Internet.

In 1998 he was selected to chair a select committee to investigate China's acquisition of U.S. nuclear and military technology. It was officially titled the Select Committee on U.S. National Security and Military/Commercial Concerns with the People’s Republic of China. However, it was known as the "Cox Committee", and its final report in 1999 was known as the "Cox Report".

He was also active in securing passage of the Securities Litigation Uniform Standards Act in the 105th Congress. See also, Cox bio.

Before his election to the House, Cox worked in the White House Counsel's office in the Reagan administration. He was previously an attorney with the law firm of Latham & Watkins.

The Democrats have yet to name the ranking Democrat on the new committee.

House Organizational News

Rep. Roy Blunt1/8. The top House Republican leadership for the 108th Congress is Speaker Denny Hastert (R-IL), Majority Leader Tom DeLay, and Whip Roy Blunt (R-MO) (at right). On January 7, the House passed as part of its rules package a provision that removes the term limit on the office of Speaker. "It best serves neither our Conference, nor the Congress, to have a lame duck Speaker of the House," said Rep. Blunt in a release.

The other members of the Republican leadership for the 108th Congress are Deborah Pryce (R-OH) (Conference Chairman), Jack Kingston (R-GA) (Conference Vice-Chair), John Doolittle (R-CA) (Conference Secretary), Chris Cox (R-CA) (Policy Chairman), Tom Reynolds (R-NY) (NRCC Chairman), Eric Cantor (R-VA) (Chief Deputy Whip), David Dreier (R-CA) (Rules Chairman), and Rob Portman (R-OH) (Leadership Chairman). See, NRCC release.

Nancy Pelosi (D-CA) will be the House Minority Leader. Rep. Steny Hoyer (D-MD) will be the House Democratic Whip. Rep. Bob Menendez (D-NJ) will be Chairman of the House Democratic Caucus.

The House Republican Conference met on Wednesday night to select committee chairmen. Rep. James Sensenbrenner (R-WI) will continue as Chairman of the House Judiciary Committee. However, Subcommittee Chairmen have not been named. Rep. Howard Coble (R-NC), the former Chairman of the Courts, Internet and Intellectual Property (CIIP) Subcommittee, is term limited. Rep. Bob Goodlatte's (R-VA) selection as Chairman of the Agriculture Committee bars him from selection as CIIP Chairman.

Rep. Billy Tauzin (R-LA) will continue as Chairman of the House Commerce Committee. The Judiciary and Commerce Committees have jurisdiction over most technology related bills.

Rep. Bill Thomas (R-CA) will continue as Chairman of the House Ways and Means Committee, which has jurisdiction over both tax and trade issues.

Rep. Bill Young (R-FL) will continue as Chairman of the House Appropriations Committee. Also, Rep. Frank Wolf (R-VA) will continue as Chairman of the Commerce, Justice, State and the Judiciary Subcommittee, which has jurisdiction over appropriations for most of the technology related federal agencies, including the Federal Communications Commission (FCC), Federal Trade Commission (FTC), U.S. Patent and Trademark Office (USPTO), National Telecommunications and Information Administration (NTIA), and Department of Justice (DOJ). See, release.

Rep. Duncan Hunter (R-CA) will be the Chairman of the House Armed Services Committee. He replaces former Rep. Bob Stump (R-AZ), who retired.

Rep. Richard Pombo (R-CA) will be the Chairman of the House Resources Committee. He replaces former Rep. James Hansen (R-UT), who retired.

Rep. Jim Nussle (R-IA) will continue as Chairman of the House Budget Committee.

Rep. Tom Davis (R-VA) (at right) will be the new Chairman of the House Government Reform Committee. He replaces Rep. Dan Burton (R-IN), who was term limited. Rep. Davis represents a tech heavy district in the Northern Virginia suburbs of Washington DC. As Chairman of the Reform Committee's Subcommittee on Technology and Procurement Policy in the 107th Congress, he focused on many technology related issues. Rep. Davis is also a former Chairman of the National Republican Congressional Committee (NRCC). Rep. Davis is also a member of the House Commerce Committee, and its Telecom and Internet Subcommittee.

Rep. Bob Goodlatte (R-VA) will be the new Chairman of the House Agriculture Committee. He replaces former Rep. Larry Combest (R-TX), who retired. Rep. Goodlatte is also a member of the House Judiciary Committee and its Courts, Internet and Intellectual Property Subcommittee. He has long been one of the House's most informed and active members on technology related issues. However, his new responsibilities on the Agriculture Committee may detract from his involvement in other issues.

On January 7, the House adopted a HRes 6, which names the Republican members of the House Rules Committee. It names Rep. David Dreier (R-CA) as Chairman, and Rep. Porter Goss (R-FL), Rep. John Linder (R-GA), Rep. Deborah Pryce (R-OH), Rep. Lincoln Diaz-Balart (R-FL), Rep. Doc Hastings (R-WA), Rep. Sue Myrick (R-NC), Rep. Pete Sessions (R-TX), and Rep. Tom Reynolds (R-NY). This is unchanged from the 107th Congress. The House also adopted HRes 6, which names the Democratic member of the Rules Committee. It names Rep. Martin Frost (D-TX), Rep. Louise Slaughter (D-NY), Rep. James McGovern (D-MA), and Rep. Alcee Hastings (D-FL).

California Republicans Dominate Committee Chairmanships

1/8. Rep. David Dreier (R-CA) returns as Chairman of the Rules Committee. Rep. Bill Thomas (R-CA) returns as Chairman of the Ways and Means Committee. Rep. Chris Cox (R-CA) is the new Chairman of the new Homeland Security Committee (as well as the Republican House Policy Committee). Rep. Duncan Hunter (R-CA) is the new Chairman of the House Armed Services Committee. Rep. Richard Pombo (D-CA) is the new Chairman of the House Resources Committee.

Republicans make up a minority of the California delegation. Moreover, in recent Congresses their proportion of the delegation has been shrinking. Nevertheless, the California Republicans now hold a disproportion share of the top House committee chairmanships.

A California Republican does not chair the powerful Appropriations Committee. However, Rep. Jerry Lewis (R-CA) is a senior member, and the Chairman of the Defense Appropriations Subcommittee. Rep. Randy Cunningham (R-CA) and Rep. John Doolittle (R-CA) are also members of the committee.

In addition, Rep. John Doolittle (R-CA) now holds a position in the House Republican leadership, Conference Chairman.

Nor does a California Republican chair the powerful House Commerce Committee. However, Rep. Cox and Rep. Mary Bono (R-CA) are both members.

Rep. Issa Introduces Amendment to Plant Patent Act

1/8. Rep. Darrell Issa (R-CA) introduced HR 242, the Plant Breeders Equity Act of 2003, a bill to amend 35 U.S.C. § 162.

Rep. Issa released a statement that elaborated that "Prior to the USPTO change of policy, a plant variety could be sold outside the United States for an unlimited number of years without barring that variety from being patented as long as the variety was not sold, offered for sale or publicly used in this country for more than one year prior to its filing. In January 2001, without warning the USPTO examiners began rejecting US plant patent applications for varieties that had been offered for sale anywhere in the world more than one year before filing a plant patent application in the United States. Breeders' applications have been denied for hundreds of patents introduced abroad but not yet introduced in the U.S. This situation undermines innovation in the horticultural industries and deprives American growers and the public of the benefits of these new varieties."

The bill would provide that "No plant patent application shall be denied, nor shall any issued plant patent be invalidated, on the grounds that the invention was described in a printed publication to which section 102(b) of this title applies, unless the invention was described in a printed publication in this or a foreign country more than ten years prior to the date of the application for patent in the United States."

Rep. Issa was elected to Congress in 2000. He served on the House Judiciary Committee, and its Courts, the Internet, and Intellectual Property Subcommittee in the 107th Congress. Rep. Issa holds thirty-six patents that pertain to consumer electronics.

The bill is cosponsored by Rep. Sam Farr (D-CA), Rep. George Nethercutt (R-WA), and Rep. Marty Meehan (D-MA).

More New Bills

1/8. Rep. Frank Wolf (R-VA) introduced HR 247, a bill making appropriations for the Departments of Commerce (which includes the U.S. Patent and Trademark Office), Justice, and State, the Judiciary, and related agencies for the fiscal year ending September 30, 2003. The bill covers the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC). It was referred to the House Appropriation Committee.

1/8. Rep. Heather Wilson (R-NM) introduced HR 329, a bill to authorize the Secretary of Education to make grants for regional workshops designed to permit educators in elementary and secondary schools to share strategies for mathematics and science instruction. It was referred to the Committee on Education and the Workforce.

USTR Launches FTA Negotiations with Central American Countries

1/8. The Office of the U.S. Trade Representative (USTR) announced the "launch of  negotiations" between the U.S., El Salvador, Guatemala, Honduras, Costa Rica and Nicaragua for a U.S. Central America free trade agreement (CAFTA). See, USTR release and the USTR's CAFTA page.

The USTR stated that "Working level negotiations on this U.S. Central American Free Trade Agreement, or CAFTA, will begin in San José, Costa Rica, on January 27. The participants will seek to complete the negotiations by December 2003."

Among the many issues involved are trade related intellectual property rights, and removing existing barriers to trade in services, including telecommunications.

This is just the latest step towards reaching a CAFTA. President Bush announced his intention to explore an FTA with central American nations on January 16, 2002. The President formally notified Congress of his intention on October 1, 2002, following passage of the trade promotion authority bill. See, letter [7 pages in PDF] to House Speaker Denny Hastert (R-IL), and substantially identical letter [7 pages in PDF] to former Senate President Pro Tempore Robert Byrd (D-WV). The USTR then noticed a public hearing. See, notice in the Federal Register, October 16, 2002, Vol. 67, No. 200, at Pages 63954 63955. The USTR held a public hearing on November 19, 2002, and received further written comments.

Sen. Charles Grassley (R-IA), the incoming Chairman of the Senate Finance Committee, which has jurisdiction over trade issues, announced his support for President Bush's CAFTA initiative. He said that "A free trade agreement with these nations represents a unique opportunity not only for U.S. farmers, businesses and workers, but also for promoting development, security and prosperity in this region."

John Murphy, U.S. Chamber VP for the Western Hemisphere, stated that "The Chamber is pushing for a comprehensive agreement that will eliminate trade barriers, protect investors and intellectual property, and raise the bar for the Free Trade Area of the Americas". See, Chamber release.

Condor Systems Charged With Making False Statements About Software in Export Application

1/8 The U.S. Attorney's Office (USAO) for the Northern District of California charged Condor Systems, Inc., by a felony information [7 page PDF scan] alleging two counts of making false statements to U.S. government officials, in violation of 18 U.S.C. § 1001. The information was filed in the U.S. District Court (NDCal). This is D.C. No. CR 03 20002. See, USAO release.

At all times relevant to the information, Condor was a privately held defense contractor specializing in signals intelligence and electronic warfare systems, located in San Jose, California. In 2002, most of its assets were acquired by EDO Reconnaissance and Surveillance Systems Inc., a wholly owned subsidiary of EDO Corporation. See, EDO release. The charges arise from Condor's efforts between 1996 and 1999 to market a tactical electronic surveillance system to the government of Sweden.

The Arms Export Control Act (AECA), and the International Trafficking in Arms Regulation (ITAR), promulgated thereunder, prohibited export of certain Condor products, without U.S. government approval. However, Condor is not charged with export violations, but rather, with making false statements with respect to attempts export to Sweden.

Condor submitted an application for approval to export a product. The information states that this application represented the product as its "COTS [Commercial Off The Shelf] version" of a related product developed for the U.S. Navy. (Brackets in original.). The information alleges that this was a false statement, since it was not a COTS version, and the government had not approved a COTS version.

Count two of the information alleges that the application also stated that the product was "being developed in parallel and separately", when in fact, it was the identical source code to that developed for the U.S. Navy.

FCC to Hold Meeting on January 15

1/8. The Federal Communications Commission (FCC) released a notice titled "Commission Meeting Agenda" that pertains to the FCC's Wednesday January 15 meeting.

The notice states as follows: "Presentations will be made in four panels: Panel One consisting of the Managing Director. Panel Two consisting of the Chiefs of the Enforcement Bureau and the Consumer and Governmental Affairs Bureau. Panel Three consisting of the Chiefs of the Office of Engineering and Technology, the Wireless Telecommunications Bureau, and the International Bureau. Panel Four consisting of the Chiefs of the Wireline Competition Bureau and the Media Bureau."

As usual, the meeting will take place at 9:30 AM Room TW-C305 (Commission Meeting Room) of the FCC headquarters, at 445 12th Street, SW.

People and Appointments

1/8. The Securities and Exchange Commission (SEC) designated Charles Niemeier to be the Acting Chairman of the Public Company Accounting Oversight Board, which was established by the Sarbanes Oxley Act of 2002. This Board oversees the audits of the financial statements of public companies through registration, standard setting, inspection and disciplinary programs. The SEC had previously selected William Webster for the position. Prior to this designation, Niemeier was the Chief Accountant in the SEC's Division of Enforcement and co-chairman of the SEC's Financial Fraud Task Force. See, SEC release.

1/8. Brian Dietz was named Senior Director, Communications, for the National Cable & Telecommunications Association (NCTA), effective January 20, 2003. See, NCTA release.

1/8. James Dempsey, who is currently Deputy Director of the Center for Democracy and Technology (CDT), will become its Executive Director, with responsibility for day to day operations and program implementation. He also focuses on privacy and electronic surveillance issues, and heads the CDT's international project, the Global Internet Policy Initiative (GIPI). Jerry Berman, who founded the CDT in 1994, will remain as President. Lara Flint will join the CDT to work on national security and civil liberties issues. She previously worked in the Washington DC office of the law firm of Jenner & Block. The Board of Directors also announced that the CDT will expand its scope to include digital copyright issues.

More News

1/8. On Wednesday night, January 8, the House passed by voice vote HJRes 1, making further continuing appropriations through January 31 for fiscal year 2003. On January 7, Rep. Deborah Pryce (R-OH), a member of the House Republican leadership, stated that the "Congress will complete its work on the remaining spending bills quickly in January." See, release.

1/8. The House Commerce Committee held a hearing on the national "Do Not Call" telemarketing list. Timothy Muris, Chairman of the Federal Trade Commission, testified. See, Muris statement.

1/8. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in In Re Peterson, an appeal from the U.S. Patent and Trademark Office Board of Patent Appeals and Interferences, which is directed to a nickel-base single-crystal superalloy used in the manufacture of industrial gas turbine engines exposed to high temperatures. The USPTO rejected Lance Peterson's and Ioannis Vasatis's claims 1-7 of U.S. Patent Application 08/365,392. The Board of Patent Appeals and Interferences affirmed the rejection on the grounds of obviousness, pursuant to 35 U.S.C. § 103. The Court of Appeals affirmed.

1/8. The Progress and Freedom Foundation (PFF) released a report [10 pages in PDF] titled "Contracts and Electronic Commerce: The Uniform Computer Information Transactions Act (UCITA)". The report, which was written by the PFF's Kent Lassman, urges widespread adoption of the UCITA. Currently, only the states of Virginia and Maryland have adopted it.

1/8. The Internet Corporation for Assigned Names and Numbers (ICANN) released a report titled "Fifth Status Report to the United States Department of Commerce Re: Progress Toward Objectives of Memorandum of Understanding – Q4 2002". See also, ICANN release.

Rep. Cox and Sen. Wyden Introduce Bill to Make Permanent Net Tax Ban

1/7. Sen. Ron Wyden (D-OR) and Rep. Chris Cox (R-CA) introduced companion bills in the Senate and House to make permanent the moratorium first enacted in the Internet Tax Freedom Act.

The bill is titled the "Internet Tax Nondiscrimination Act". It would make permanent the current moratorium on Internet access taxes, and multiple and discriminatory taxes on Internet commerce. It would amend Section 1101 of the Internet Tax Freedom Act, which is codified at 47 U.S.C. 151 note.

The original Internet Tax Freedom Act, which was passed as part of a larger omnibus bill in late 1998, contained a three year moratorium. It expired on October 20, 2000. The 107th Congress passed HR 1552, also titled the Internet Tax Nondiscrimination Act, which extended the moratorium until November 1, 2003. It too was sponsored by Rep. Cox, while Sen. Wyden sponsored a companion bill in the Senate.

In prior Congressional debates, opponents have argued that the Internet tax moratorium is harming the ability of state and local taxing authorities to finance schools, police, and fire protection. They have also argued that any legislation should address state collection of sales and use taxes, which is not affected by the moratorium. Currently, Quill v. North Dakota, 504 U.S. 298 (1992), provides that state and local taxing authorities are barred under the Commerce Clause from requiring remote sellers without a substantial nexus to the taxing jurisdiction to collect sales taxes for sales to persons in the jurisdiction. However, the Court added that Congress may extend such authority. Congress has passed no legislation pertaining to sales and use taxes. However, several bills were introduced in the 107th Congress that would have provided this authority. See, for example, HR 1410, sponsored by Rep. Ernest Istook (R-OK), and S 512, sponsored by Sen. Byron Dorgan (D-ND).

Sen. Ron WydenSen. Wyden (at right) spoke in the Senate on January 7, 2003 regarding his bill. He said that "predictions that the Internet Tax Freedom Act would topple Western Civilization have not come to pass. Since the moratorium on taxation of out of State, online sales was first enacted in October 1998, not a single community, county or state has come forward to prove it is being injured by its inability to impose discriminatory taxes on electronic commerce. There is simply no evidence that States have lost revenue by technology driven commerce."

He added that "A number of States seem to be arguing that their economic future is tied to taxing technology entrepreneurs located thousands of miles away with no physical presence in their jurisdiction. I don't share this view."

Sen. Wyden also commented on the Quill case. He stated that "Congress will soon be asked again by the Streamlined Sales Tax Project States to take the political heat for new sales taxes. The U.S. Senate has voted three times in recent years on whether to overturn Quill to require remote sellers with no nexus to serve the States as their tax collectors. Every time the Senate has rejected the notion. On January 19, 1995, the Senate voted 73-25 to table the amendment; on October 2, 1998, the Senate voted 66-29 to table the amendment; and most recently, on November 15, 2001, the Senate voted 57-43 to table the amendment."

Reps. Boucher and Doolittle Introduce Digital Fair Use Bill

1/7. Rep. Rick Boucher (D-VA) and Rep. John Doolittle (R-CA) introduced HR 107 [10 pages in PDF], the "Digital Media Consumers' Rights Act of 2003". This is essentially the same bill as HR 5544 (107th), a bill by the same title that the two introduced late in the 107th Congress. See, TLJ story titled "Reps. Boucher and Doolittle Introduce Digital Media Consumer Rights Act", October 3, 2002.

The bill would do several things. First, it would  require that certain information be placed on the labels of music discs, and that a violation would constitute an unfair or deceptive trade practice within the meaning of the Federal Trade Commission Act. However, this is not the more important part of the bill. It does serve, however, to give the House Commerce Committee primary jurisdiction. The House Judiciary Committee, which has jurisdiction over intellectual property issues, is more protective of the interests of intellectual property owners.

Second, and more importantly, the bill would roll back the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA). Specifically, it would create fair use exceptions to the bans on circumvention of technological measures to protect copyrighted works. It would also provide an exception for scientific research into technological protection measures.

Rep. Rick BoucherRep. Boucher (at right) discussed his bill in a statement that he submitted for the Congressional Record of January 7. He said that "The Digital Millennium Copyright Act of 1998 (DMCA) tilted the balance in our copyright laws too heavily in favor of the interests of copyright owners and undermined the longstanding fair use rights of information consumers, including research scientists, library patrons, and students at all education levels. With the DMCRA, we intend to restore the historical balance in our copyright law that has served our nation well in past years."

The bill is also cosponsored by Rep. Spencer Bachus (R-AL) and Rep. Patrick Kennedy (D-RI). See also, Rep. Boucher's release, short summary, and section by section analysis of the DMCRA.

Explanation of Key Fair Use Provisions of Bill. Currently, § 1201(a)(1)(A) of the Copyright Act, which was added in 1998 by the DMCA, provides that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title." See, 17 U.S.C. § 1201.

Then, § 1201(a)(2)(A) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --- (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;"

Furthermore, § 1201(b)(1)(A) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that --- (A) is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof;"

The Boucher Doolittle bill would add to both of these sections an exception for scientific research. Specifically, the bill provides that "Subsections (a)(2)(A) and (b)(1)(A) ... are each amended by inserting after ‘‘title’’ in subsection (a)(2)(A) and after ‘‘thereof’’ in subsection (b)(1)(A) the following: ‘‘unless the person is acting solely in furtherance of scientific research into technological protection measures’’."

Then, there is the critical part of the bill. Currently, § (c)(1) provides that "Nothing in this section shall affect rights, remedies, limitations, or defenses to copyright infringement, including fair use, under this title."

The Boucher Doolittle bill would to this sentence the following phrase: "and it is not a violation of this section to circumvent a technological measure in connection with access to, or the use of, a work if such circumvention does not result in an infringement of the copyright in the work".

Also, the bill would add to § (c) the following new subparagraph: "(5) It shall not be a violation of this title to manufacture, distribute, or make noninfringing use of a hardware or software product capable of enabling significant noninfringing use of a copyrighted work."

Neither of these two additions to § 1201(c) uses the term "fair use"; and neither references § 107, which codifies the fair use doctrine. However, the title of the subsection of the bill that contains these two additions is "FAIR USE RESTORATION".

Reaction. Rep. Boucher released a list of supporters of the bill. It includes corporations, such as Intel, Sun Microsystems, Philips, and Verizon. It also include library and university groups. Finally, it includes groups more focused on digital copyright issues such a Public Knowledge.

The bill also has its critics. For example, Business Software Alliance (BSA) VP for Policy Robert Cresanti stated in a release that "We have important reservations, however, about the changes his bill would make to the anti-circumvention provisions of the Digital Millennium Copyright Act. The DMCA provides important tools in the fight against piracy. We fear that broad exemptions to the DMCA could undermine the core purpose of the Act -- that technological measures can have an important and proper role in curbing piracy. Our principal reservation is that the bill could make it harder for software companies to take action against pirates."

Rep. Leach Introduces Internet Gambling Bill

1/7. Rep. James Leach (R-IA) introduced HR 21, a bill that would attempt to bar Internet gambling operations access to the U.S. financial services system by banning the use of credit cards, wire transfers, or any other bank instrument to fund gambling transactions. Similar, legislation was passed in the 107th Congress by the House Financial Services Committee (HFSC), and then by the full House. However, it did not pass the Senate. See, HFSC release.

Rep. Leach, and other members of the House, such as Rep. Bob Goodlatte (R-VA) and former Rep. John LaFalce (D-NY), as well as several members of the Senate, and especially Sen. Jon Kyl (R-AZ), have been attempting to pass legislation that would limit Internet gambling for many years. All efforts to date have failed.

Rep. James Leach.Rep. Leach (at right) stated that "These unregulated gambling sites are a direct pipeline of dollars out of the United States into virtually unknown hands.  This factor makes the financial services industry vulnerable to criminal and terrorist activity and Americans citizens vulnerable to identity theft and other personal scams ... Internet gambling serves no legitimate purpose in our society and is a danger to family and society at large. It should be ended."

The bill has 14 original cosponsors, including Rep. Goodlatte, who in past Congresses has sponsored his own related anti-Internet gambling legislation. While the Leach bill focuses on the financial transactions involved in Internet gambling, the Goodlatte approach involves amending the Wire Act.

In a related matter, Rep. Barney Frank (D-MA) will become the ranking Democrat on the Financial Services Committee, replacing former Rep. LaFalce, who retired. LaFalce had been a leading supporter of anti-Internet gambling legislation in the 107th Congress, while Frank opposed it.

SGI Pleads Guilty to Selling HPCs to Russian Nuclear Weapons Lab

1/7. Silicon Graphics Inc. (SGI) plead guilty in U.S. District Court (NDCal) to two felony counts involving violating export control regulations in connection with the export of high performance computers (HPCs) to a Russian nuclear laboratory in 1996.

The Bureau of Industry and Standards (BIS), which was formerly known as the Bureau of Export Administration (BXA), stated in a release that "SGI agreed to pay $1 million in criminal fines to resolve the charges. In a related administrative case, SGI agreed to pay $182,000 -- the maximum penalty authorized by the Export Administration Regulations (EAR) -- to settle civil charges arising from the same exports to the Russian nuclear laboratory, as well as additional charges relating to illegal computer exports to Israel and for failure to meet reporting requirements for exports to China, Qatar, and the United Arab Emirates."

The BIS also stated that "SGI admitted that, on two occasions in 1996, the company exported four Challenge L computer systems, upgrades, and peripheral equipment to the All-Russian Institute for Technical Physics (Chelyabinsk-70) in violation of U.S. export control regulations. Chelyabinsk-70, located in Snezhinsk, Russia, is a nuclear laboratory operated by Russia's Ministry of Atomic Energy and is engaged in research, development, testing, and maintenance of nuclear devices."

In addition, SGI's exporting privileges to Russia will be denied for three years.

SGI stated in a release that the "The 1996 exports came at a time when the U.S. government, in the spirit of post-Cold War cooperation, was encouraging the technology industry to assist Russia's government laboratories in developing commercially beneficial scientific research. SGI's customer represented that the computers were to be used for civilian research, including environmental analysis and remediation in one of the most polluted areas of the world. However, because the export was made to a government-operated facility involved in both civil and non-civil activities in Russia, SGI has agreed in this settlement that it should have applied for an export license."

The Nuclear Threat Initiative (NTI), a group co-chaired by Ted Turner and former Senator Sam Nunn (D-GA), reports that the All-Russian Institute for Technical Physics (Chelyabinsk-70) was established to design and build nuclear warheads. It further states that "It possesses facilities that simulate different aspects of nuclear explosions, including pulsed reactors, lasers, shock wave generators and computers." See, NTI summary of Chelyabinsk-70.

The All-Russian Institute for Technical Physics also has its own web site, but it is mostly in Russian.

Bush Nominates Judges

1/7. President Bush nominated numerous persons to be federal judges, including many persons whom he had also nominated in 2001. See, White House release.

In the previous Congress, the Democrats held a majority in the Senate, and on the Senate Judiciary Committee, which reviews judicial nominees. Sen. Patrick Leahy (D-VT), the Chairman of the Committee in the 107th Congress, held up many key nominees, especially those picked for the Courts of Appeals, by taking no, or little, action on their nominations. The Republicans regained control of the Senate in the November 2002 elections. Sen. Orrin Hatch (R-UT) will return as Chairman of the Committee.

Consequently, President Bush has renominated many persons who had been held up or rejected by the Senate Judiciary Committee in the last Congress. It was a regular component of President Bush's campaign speeches leading up to the November elections to ask voters to elect a Republican Senator so that he could get his judicial nominees confirmed by the Senate.

He most frequently focused on the nomination of Judge Priscilla Owen, who was rejected by the Committee on a party line vote. Bush renominated her to be a judge of the U.S. Court of Appeals (5thCir). Bush also renominated Judge Charles Pickering for a seat on the Fifth Circuit. He too was rejected on a party line vote by the Senate Judiciary Committee.

Bush also renominated Miguel Estrada (DC Circuit), who received only a hearing in the last Congress. He also renominated John Roberts (DC Circuit) who did not even receive a hearing last time around. Other key renominations include Jay Bybee (9th Circuit) and Carolyn Kuhl (9th Circuit).

The President also nominated Deborah Cook (Sixth Circuit), Richard Griffin (Sixth Circuit), David McKeague (Sixth Circuit), Susan Neilson (Sixth Circuit), Henry Saad (Sixth Circuit), and Jeffrey Sutton (Sixth Circuit). Bush also nominated Terrence Boyle (Fourth Circuit) and Timothy Tymkovich (Tenth Circuit).

Bush also nominated numerous persons to be U.S. District Court Judges: John Adams (ND Ohio), Daniel Breen (WD Tennessee), Cormac Carney (CD California), James Dever (ED North Carolina), Ralph Erickson (North Dakota), Sandra Feuerstein (ED New York), Gregory Frost (SD Ohio), Maurice Hicks (WD Louisiana), Richard Holwell (SD New York), Robert Junell (WD Texas), Thomas Ludington (ED Michigan), James Otero (CD California), William Quarles (Maryland), Frederick Rohlfing (Hawaii), Thomas Varlan (ED Tennessee), and William Steele (SD Alabama),

President Bush also nominated Timothy Stanceu to be a Judge of the U.S. Court of International Trade. He also  made several nominations for 15 year terms on the Court of Federal Claims: Susan Braden, Marian Horn, Charles Lettow, Mary Ellen Coster, and Victor Wolski. See, White House release.

Many of President Bush's nominees, particularly Court of Appeals nominees, will be opposed by liberal groups such as the National Abortion Rights Action League (NARAL). NARAL's Kate Michelman said in a release after the November 7 elections that President Bush "is moving aggressively to pack the courts with conservative ideologues in order to appeal to the far right wing of his party. With the White House and Congress now both in anti-choice hands, the President's move to stack the courts represents an attempt to fundamentally realign our entire federal government. The consequences, if left unchallenged, will be profound and real for generations to come."

During the 107th Congress very few technology related issues were addressed in Senate Judiciary Committee hearings on judicial nominations. Moreover, few of the nominees have backgrounds representing technology interests, or in fields of law that are important to the technology sector.

Bush Names Three to New Department of Homeland Security

Tom Ridge1/7. President Bush nominated Thomas Ridge (at right) to be Secretary of Homeland Security. See, White House release. Ridge has been Bush's homeland security advisor since October of 2001. He was Governor of Pennsylvania from 1995 through 2001. Before that he was a seven term Congressman from Erie, Pennsylvania. Before that he was prosecutor. He is also a decorated Viet Nam combat veteran.

On November 25, 2002, President Bush signed HR 3005 (Public Law No: 107-296), the bill creating the new Department of Homeland Security.

Gordan England1/7. President Bush nominated Gordon England (at right) to be Deputy Secretary of Homeland Security. See, White House release. England is currently Secretary of the Navy. England was previously EVP of General Dynamics, where he was responsible for information systems. Before that, he was EVP of the Combat Systems Group at General Dynamics. His undergraduate degree is in electrical engineering.

1/7. President Bush announced his intention to appoint Steven Cooper to be the Chief Information Officer at the Department of Homeland Security. He is currently Special Assistant to the President and Senior Director for Information Integration in the Office of Homeland Security. He previously worked at Corning. Before that, he worked for Eli Lilly. See, White House release.

Bush Proposes Changes to Tax Laws

1/7. President Bush made several proposals, particularly with respect to taxation, that are intended to increase the level of economic activity. He proposed ending the taxation of dividend income; he proposed accelerating the effective dates of several tax reductions that were included in legislation passed in 2001; he proposed raising the amount of equipment purchases that small businesses can expense; and, he proposed extending unemployment benefits and creating new re-employment accounts for displaced workers.

Phil Bond, who is Under Secretary of Commerce for Technology, and hence, a member of the Bush administration, stated that "The technology community will continue to play a leading role in our economic recovery and today's stimulus package will give them the tools they need to increase investment and create new jobs." He continued that "This Administration is committed to maintaining American leadership in a knowledge-based economy. Today's growth package is designed to create a pro-technology, pro-growth economy both in the near-term and the long-term". See, release.

Dividend Income. Bush gave a speech in Chicago, Illinois, in which he discussed his proposals. He addressed dividend taxation at length. He emphasized the equitable treatment of dividend income, rather that the effect that his proposal might have on investment and economic performance.

He stated that "We are increasingly a nation of owners, who invest for retirement and the other financial challenges of life. One-half of American households own stock, either directly or through pension funds. And we have an obligation to make sure -- now more than ever -- that American investors are treated fairly. We can begin by treating investors fairly and equally in our tax laws. As it is now, many investments are taxed not once, but twice. First, the IRS taxes a company on its profit. Then it taxes the investors who receive the profits as dividends." He added that "Double taxation is wrong. Double taxation falls especially hard on retired people."

Bush also argued that "Double taxation is bad for our economy. ... The benefits of this tax relief will be felt throughout the economy. Abolishing double taxation of dividends will leave nearly 35 million Americans with more of their own money to spend and invest, which will promote savings and return as much as $20 billion this year to the private economy. By ending this investment penalty we will strengthen investor confidence. See, by ending double taxation of dividends, we will increase the return on investing, which will draw more money into the markets to provide capital to build factories, to buy equipment, hire more people."

Small Business Expenses. Bush stated that "Currently, tax law permits small firms to write off as expenses up to $25,000 worth of equipment -- like computers or machinery that they need. I'm asking the Congress to raise that limit to $75,000, and index that number for inflation. This change, together with the faster rate reductions, will benefit more than 23 million small business owners. My view is this economy can thrive only if our small businesses thrive. And we will provide them every incentive to grow and create more jobs."

Acceleration of 2001 Tax Cuts. President Bush also stated in his Chicago speech that "I'm asking Congress to speed up three other tax reductions promised in 2001 -- tax reductions that will help our middle-income families. Instead of slowly reducing the marriage penalty until 2009, we should do it now, to help 35 million married couples. Instead of waiting until 2008 to move more taxpayers from the 15 percent bracket to the lowest bracket of 10 percent, we should make that change now and help 2 million working Americans. And instead of gradually raising the child tax credit from $600 to $1,000 per child by the year of 2010, for the benefit of 26 million families, we should raise it now."

See also, White House press office summary of proposal.

Sen. Paul Sarbanes (D-MD), the ranking Democrat on the Senate Banking Committee, stated that "A stimulus should be focused on the short run and it ought not to center on long run problems ... The Bush proposal is just the reverse of that. There is not much in the short run, there is a large amount in the long run, which is creating all kinds of problems for us down the road when we ought to be addressing the growing deficit problem, the future demands on Social Security, on Medicare, on education, and on all these pressing needs we have as a country."

Sen. Sarbanes added, "Who would argue that the Bush Administration's proposal is prudent and wise when we are confronted with a war on terrorism abroad, with a homeland security issue, and with a growing likelihood of a military operation with Iraq to commit away your resources the way the Bush plan does." He concluded that "This plan is lacking in prudence and demonstrates the reckless fiscal course the Administration is pursuing".

U.S. Telecom Association (USTA) President Walter McCormick released a statement in which he praised the proposal. He said “We applaud President Bush for his bold economic stimulus plan and his strong efforts to revitalize the nation's economy. In particular, the President’s call for elimination of redundant double-taxation of dividends, accelerated depreciation for investments and the permanent repeal of the death tax are critical to increasing consumer confidence and job creation."

McCormick also used the occasion to urge regulatory relief for the incumbent local exchange carriers. He said that "The telecommunications industry has experienced today's economic challenges first-hand and we welcome President Bush’s stimulus plan. However, as a principal engine of the U.S. economy, the telecom industry continues to be hobbled by outdated regulations that stifle capital investment. We stand ready to work with the Administration and the new Congress to implement growth-oriented policies that remove roadblocks to needed national investment and encourage renewed expansion of the U.S. economy and telecom sector."

People and Appointments

1/7. Jonathan Solomon was name Special Assistant to FBI Director Mueller. See, FBI release.

DOJ Opposes CCIA and SIIA Attempt to Appeal in Microsoft Antitrust Case

1/6. The Antitrust Division of the Department of Justice (DOJ) filed a memorandum with the U.S. District Court (DC) opposing the motion [25 pages in PDF] of the Computer & Communication Industry Association (CCIA) and the Software & Information Industry Association (SIIA) for leave to intervene to appeal in the government antitrust action against Microsoft. The argument asserted in the memorandum is basic. Neither the CCIA nor the SIIA is a party to the action. Therefore, they lack standing to appeal.

The pleading is titled "Memorandum of the United States in Opposition to the Joint Motion of Amici Curiae CCIA and SIIA for Leave to Intervene for Purposes of Appeal". This is Civil Action No. 98-1232 (CKK).

The DOJ argues that "the Joint Movants fall far short of the minimum requirements for intervention to appeal the substance of the Court's public interest determination pursuant to the applicable rule, Rule 24 of the Federal Rules of Civil Procedure. ... The Joint Movants largely ignore those requirements, therefore, and focus on matters which may properly inform a court's decision to grant or withhold permissive intervention to an applicant for intervention who does meet the minimum requirements, as well as on matters outside Rule 24 entirely."

The DOJ memorandum states that "In effect, Joint Movants argue that this Court should ignore the requirements of Rule 24 and grant intervention simply because the parties should not be permitted to settle an important antitrust case without appellate review of the district court's public interest determination."

"The rule that only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment, is well settled." Marino v. Ortiz, 484 U.S. 301, 304 (1988) (per curiam). The Court of Appeals said more than 50 years ago that it had long been settled that "one who is not a party to a record and judgment is not entitled to appeal therefrom." United States v. Seigel, 168 F.2d 143, 144 (D.C. Cir. 1948). As the Court of Appeals has specifically found, "[n]othing in the language of the [Tunney] Act indicates that Congress intended to change the general rule." United States v. LTV Corp., 746 F.2d 51, 54 (D.C. Cir. 1984). Thus, the Court of Appeals strictly applied the rule in dismissing the purported appeal of a non-party who had participated actively in the LTV Tunney Act proceeding", wrote the DOJ.

Adelstein Addresses Copyright and Media Ownership

1/6. Federal Communications Commission (FCC) Commissioner Jonathan Adelstein gave an speech titled "The Last DJ?: Finding a Voice on Media Ownership". He addressed the FCC's pending rulemaking proceeding regarding copyright protection, and the FCC's pending proceedings pertaining to media ownership and cross ownership rules. He began his discussion of media ownership with praise for the Supreme Court's decision in the Red Lion case. See, full story.

Federal Circuit Rules in Amgen v. TKT

1/6. The U.S. Court of Appeals (FedCir) issued its opinion [MS Word] in Amgen v. TKT, a declaratory judgment action brought by Amgen, the holder of several patents directed to the production of EPO, a hormone that stimulates the production of red blood cells.

Amgen filed a complaint in the U.S. District Court (DMass) against Hoechst Marion Roussel (which is now known as Aventis Pharmaceuticals) and Transkaryotic Therapies (hereinafter defendants are referred to as TKT) seeking declaratory judgment that TKT's Investigational New Drug Application (INDA) infringed Amgen's U.S. Patent Nos. 5,547,933, 5,618,698, and 5,621,080. Amgen later amended its complaint include its U.S. Patent Nos. 5,756,349 and 5,955,422.

The District Court conducted a three day Markman hearing and 23 day trial, and then issued its 244 page opinion (126 F. Supp. 2d 69, 57 USPQ2d 1449) which the Appeals Court described as "thorough, careful, and precise". The District Court "(i) construed the disputed claims; (ii) held each of the patents enforceable; (iii) held the ’080, ’349 (product claims), and ’422 patents valid and infringed; (iv) held the ’698 patent not infringed; and (v) held the ’933 patent not infringed or, in the alternative, invalid for failure to satisfy 35 U.S.C. § 112."

TKT appealed, arguing that Amgen's patents are unenforceable, that the District Court's claim construction was erroneous, and alternatively, that its validity determinations were erroneous. Amgen cross appealed, arguing that the District Court erred "(i) by comparing the accused process to the examples in the specification rather than the limitations of the method claims of the '349 and '698 patents; and (ii) by holding the '933 patent invalid for failure to comply with § 112."

The Appeals Court largely affirmed the District Court. However, it also vacated parts of the District Court opinion, and remanded for further proceedings.

The Appeals Court summarized its ruling as follows: "We affirm in toto the district court’s claim construction. We also affirm: (i) its determination that none of the patents in suit is unenforceable for inequitable conduct; (ii) its contingent determination that the '933 patent is invalid under § 112 ¶ 1; (iii) its grant of summary judgment of infringement of '422 patent claim 1; (iv) its determination that the '080, '933, '349, and '698 patents are not anticipated by the Sugimoto reference; and (v) its determination that '349 patent claims 1, 3-4, and 6 are infringed."

However, the Appeals Court continued that "we vacate: (i) its determination that the '933 patent is not infringed; (ii) its determination that the '080 patent is infringed under the doctrine of equivalents; (iii) its determination that the '080, '349, and '422 patents are not invalid; and (iv) its determination that the asserted method claims of the '698 patent and '349 patent claim 7 are not infringed. Accordingly, we remand for the district court to reconsider: (i) whether the '080, '349, and '422 patents are obvious in light of the Sugimoto prior art or anticipated or obvious in light of the Goldwasser prior art; (ii) whether the '422 patent is anticipated by Sugimoto reference (and whether Amgen can prove its nonenablement); (iii) whether the asserted claims of the '698 patent and '349 patent claim 7 are infringed by the accused method; and (iii) whether the '080 patent is infringed under the doctrine of equivalents."

Judge Clevenger dissented in part, with respect to specification under Section 112.

Go to News from January 1-5, 2003.