News from October 21-25, 2003

Bush Addresses Internet Pornography

10/25. President Bush proclaimed October 26 through November 1 to be "Protection From Pornography Week". He issued a proclamation  in which he reviewed the recently enacted Dot Kids bill, the PROTECT Act of 2003, and DOJ prosecutorial efforts.

The Dot Kids Implementation and Efficiency Act of 2002, HR 3833 in the 107th Congress, Public Law No. 107-317, required the National Telecommunications and Information Administration (NTIA) to create a second level domain within the .us country code domain that is restricted to material that is not harmful to minors. Bush called it "child-friendly zone on the Internet".

The Prosecuting Remedies and Tools Against the Exploitation of Children Today Act of 2003 (PROTECT Act) is S 151 (108th Congress). Bush signed the bill on April 30, 2003. It is now Public Law No. 108-21. This bill includes several tech related items, including a ban on use of certain misleading domain names, provisions pertaining to computer generated images, and an expansion of the list of offenses that may serve as a predicate for the issuance of a wiretap order.

Bush stated that "We have committed significant resources to the Department of Justice to intensify investigative and prosecutorial efforts to combat obscenity, child pornography, and child sexual exploitation on the Internet. We are vigorously prosecuting and severely punishing those who would harm our children. Last July, the Department of Homeland Security launched Operation Predator, an initiative to help identify child predators, rescue children depicted in child pornography, and prosecute those responsible for making and distributing child pornography."

Said Bush, "we are making progress in protecting our children from pornography".

GAO Releases Study on Cable Industry

10/24. The General Accounting Office (GAO) released a study [94 pages in PDF] titled "Telecommunications: Issues Related to Competition and Subscriber Rates in the Cable Television Industry". The report finds that competition, whether from other wire based cable operators, or from direct broadcast satellite (DBS), leads to lower prices and better quality service.

The report states that "Competition from a wire-based provider -- that is, a competitor using a wire technology, such as a second cable operator, a local telephone company, or an electric utility -- is limited to very few markets. However, in those markets where this competition is present, cable rates are significantly lower -- by about 15 percent -- than cable rates in similar markets without wire-based competition."

It adds that "Since 1999, when DBS operators acquired the legal right to provide local broadcast stations (such as affiliates of ABC, CBS, Fox, and NBC), these companies have emerged as important competitors to cable operators. In particular, in areas where subscribers can receive local broadcast stations from both primary DBS operators, the DBS penetration rate -- that is, the percentage of households that subscribe to satellite service -- is approximately 40 percent higher than in areas where subscribers cannot receive local broadcast stations from both primary DBS operators. In addition, the DBS provision of local broadcast stations has induced cable operators to improve the quality of their service by providing their subscribers with approximately 5 percent additional cable networks." (Parentheses in original.)

The GAO report also assesses the Federal Communications Commission's (FCC) cable rate reports. It concludes that these do "not appear to provide a reliable source of information on the cost factors underlying cable rate increases or on the effects of competition. GAO found that cable operators did not complete FCC’s survey in a consistent manner, primarily because the survey lacked clear guidance. In particular, GAO found that 84 of the 100 franchises it surveyed did not provide a complete or accurate accounting of their cost changes for the year. Also, GAO found that FCC does not initiate updates or revisions to its classification of competitive and noncompetitive areas. Thus, FCC’s classifications might not reflect current conditions." (Parentheses in original.)

The GAO also addresses cable rates. It finds that "During the past 3 years, the cost of programming has increased considerably (at least 34 percent), driven by the high cost of original programming, among other things. Additionally, cable operators have invested large sums in upgraded infrastructures, which generally permit additional channels, digital service, and broadband Internet access."

The report also finds "Technological, economic, and contractual factors explain the practice of grouping networks into tiers, thereby limiting the flexibility that subscribers have to choose only the networks that they want to receive. An à la carte approach would facilitate more subscriber choice but require additional technology and customer service. Additionally, cable networks could lose advertising revenue. As a result, some subscribers’ bills might decline but others might increase.

Finally, the report comments that "Although reregulation of cable rates is one option, promoting competition could influence cable rates through the market process."

The GAO is an arm of the Congress. It prepared this report at the request of Sen. John McCain (R-AZ), the Chairman of the Senate Commerce Committee.

Sen. McCain stated in a release that "The GAO Report confirms that competition matters. Competition brings lower rates, improved service quality, and more choices for consumers. According to the report, consumers in the few markets with a choice of a second cable company pay 15 percent less for cable."

He added "The apparent implication for all other consumers is that they continue to be fleeced by their cable operators. Consumers benefit from more choices -- the choice of video distributors, the choice of cable networks, and the choice not to pay for multiple channels that they do not watch."

He also stated that "The Report addresses numerous issues ripe for examination by the Committee, including doubts about the reliability of the FCC's assessment of cable competition, increased sports and other programming costs, the impact of ownership affiliation on cable carriage, and a la carte programming options. Moreover, it discusses numerous options for policy makers to consider in addressing escalating cable rates. These are complex issues, and I look forward to reviewing the report more closely at a hearing of the Commerce Committee in the near future."

Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee, stated in a release that "I am committed to ensuring that consumers reap the benefits of a robust media and telecommunications marketplace. Today's GAO report confirms that competition from satellite and other multichannel television services is increasing, and that the cable industry is responding. The result is better service to consumers at rates that are 15 percent lower where competition is present."

Rep. Tauzin added that "The report indicates that 'taking steps to promote competition' and 'leveraging the normal workings of the marketplace' will yield additional benefits. With this in mind, I will continue to work with Telecommunications and Internet Subcommittee Chairman Fred Upton to further accelerate competition in the media marketplace, spur innovation and promote even better service to consumers."

Robert Sachs, P/CEO of the National Cable Telecommunications Association (NCTA), stated in a release that "GAO's analysis confirms that cable price increases reflect significant investments by cable operators in infrastructure and programming, which have improved the quality and consumer value of cable television. The report also shows, significantly we believe, that proposals to reregulate cable program service would not benefit consumers. Rather, forcing cable operators to package programming a la carte, would produce a net loss for many cable customers, who would end up paying higher prices for fewer channels."

Randolph May of the Progress and Freedom Foundation (PFF) stated in a release that "the factors that have contributed most to increasing cable rates are the huge sums invested, around $75 billion since 1996, to upgrade cable infrastructure and increasing program costs." He added that "these investments have led to more consumer choice and the availability of widespread broadband Internet service". He recommended that the government should "ensure that all broadband technology platforms, whether cable, telephone, satellite, wireless are not subject to public utility-type rate or other regulation."

USTR Offers Recommendations to Japan Regarding Regulatory Reform

10/24. The Office of the U.S. Trade Representative (USTR) released a report [59 pages in PDF] titled "Annual Reform Recommendations from the Government of the United States to the Government of Japan under the U.S.-Japan Regulatory Reform and Competition Policy Initiative". It addresses, among other topics, information technology, intellectual property, communications, competition policy, and transparency.

Information Technology. The USTR report recommends that Japan "Expand nationally and make permanent the Special Zones to promote IT and e-education; remove existing barriers that impede B-to-B and B-to-C e-commerce; increase private sector input at all stages of the IT policy-making process."

The report also recommends that Japan "Support private sector self-regulatory mechanisms for privacy and Alternative Dispute Resolution" and "ensure transparency and inter-ministerial coordination in the implementation of guidelines and standards for Japan’s new privacy law and network security".

It also recommends that the government of Japan "Implement reforms in IT procurement procedures based on the principles of open competition, technological neutrality, transparency, and private sector-led innovation."

Intellectual Property Rights (IPR) Protection. The report recommends that Japan extend the copyright term for sound recordings, and "strengthen protection of digital content and the enforcement system against IPR infringement."

Communications. The report offers several communications related recommendations. It recommends an independent regulatory agency, and an end to the "Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT) control over NTT’s business decisions." It also recommends increased public participation in, and judicial review of, the MPHPT's regulatory decisions.

It also recommends deregulation of non-dominant carriers, but reinforced "dominant carrier safeguards to prevent abuses by carriers with market power."

The report also offers recommendations regarding wireline interconnection rate methodology, and mobile termination rates.

FCC Responds to CTIA LNP Petition for Writ of Mandamus

10/24. The Federal Communications Commission (FCC) filed with the U.S. Court of Appeals (DCCir) its brief [21 pages in PDF] in opposition to the Cellular Telecommunications & Internet Association's (CTIA) Petition for Writ of Mandamus pertaining to several outstanding implementation issues regarding number portability.

The FCC has set November 24, 2003 as the deadline for providing wireless LNP. On September 24, the Court of Appeals ordered the FCC to file a response to the CTIA's petition. See, story titled "Appeals Court Orders FCC to Respond to Petitions for Writ of Mandamus Regarding Number Portability" in TLJ Daily E-Mail Alert No. 749, September 30, 2003.

The FCC argues that "CTIA has not made out a case of unreasonable delay, for the following reasons: (1) the FCC is not obligated to resolve the CTIA petitions by a specific statutory deadline; (2) the issues raised in the petitions do not have to be resolved before November 24, 2003, in order for wireless number portability to go forward on that date; (3) the agency’s resources are currently pressed by a number of other important issues; and (4) the CTIA petitions have been pending at the agency for less than a year – in fact, one petition has been pending for less than half a year. Moreover, FCC staff is finalizing a draft order that is to be placed on circulation before the Commission shortly. Because the FCC is ``moving expeditiously´´ to resolve the issues raised by CTIA in its mandamus request, this Court should deny the petition."

This case is In Re Cellular Telecommunications & Internet Association, U.S. Court of Appeals for the District of Columbia, No. 03-1270.

PFF Paper Addresses DMCA Section 512 Subpoenas

10/24. The Progress And Freedom Foundation (PFF) released a paper [18 pages in PDF] titled "Subpoena Wars: RIAA v. Verizon", by James DeLong of the PFF. The report predicts that the "content companies' victory will probably stand on appeal." It adds that this will be because of "the language of the statute and on the congressional intent to deal with the whole problem."

Internet service providers (ISPs), and especially Verizon and SBC, as well as privacy advocates, have argued that subpoenas issued by the U.S. District Court (DC), pursuant to Section 512 of the Digital Millennium Copyright Act (DMCA), that direct ISPs to provide information about subscribers alleged to be engaging in P2P copyright infringement over the ISPs' networks, are invalid.

There are also proposals that the Congress should revise the subpoena provisions of Section 512. However, on September 18, Rep. Lamar Smith (R-TX), the Chairman of the House Judiciary Committee's Courts, the Internet and Intellectual Property Subcommittee, stated that his subcommittee will not revisit the DMCA subpoena issue. See, story titled "Rep. Lamar Smith Says House CIIP Subcommittee Won't Revisit DMCA Subpoena Issue" in TLJ Daily E-Mail Alert No. 742, September 18, 2003.

Nevertheless, the PFF paper makes further legislative proposals. It argues that "the most serious and meritorious claim of the ISPs is the cost recovery issue, something not at issue in the current law suits. Solving this could be the subject of private negotiation, however. It would not require new legislation."

The cost recovery issue was raised by Pacific Bell Internet Services in another lawsuit challenging Section 512 subpoenas. See, story titled "Pacific Bell Internet Services Sues RIAA Over DMCA Subpoenas" in TLJ Daily E-Mail Alert No. 709, August 1, 2003.

The PFF paper also states that "Any claim of privacy by the music downloaders is weak, especially because they themselves control what files are made available over the Internet. They only files accessible by the copyright police are those that have been designated as available for sharing."

It also concludes that the "cyberstalking issues and other possible abuses must be regarded as worrisome, but the problem has not been shown to be real, nor is it clear that the sanctions available would not be effective. With respect to mistakes, adequate sanctions are available to deter the content owners from acting sloppily on the theory that they can shift the costs of error to the targets."

It adds that "There is a legitimate concern about issues related to the breadth of copyright protection and the possible application of subsection 512(h) to emails, chatroom debate and similar writings. But this potential problem remains inchoate, and might best be fixed by judicial action to clarify the doctrine of fair use, not by a roundabout route of leaving the right fuzzy but undermining enforcement."

Finally, it concludes that "an ISP policy of notifying the targets of subpoenas would do much to forestall any real-world problems that might arise. The costs of this procedure could be incorporated into any reimbursement scheme. If problems do exist, then relatively minor changes in the system should be adequate to address the problems."

See also, stories titled "RIAA Seeks to Enforce Subpoena to Identify Anonymous Infringer" in TLJ Daily E-Mail Alert No. 499, August 27, 2002; "Verizon and Privacy Groups Oppose RIAA Subpoena" in TLJ Daily E-Mail Alert No. 501, September 4, 2002; "District Court Rules DMCA Subpoenas Available for P2P Infringers" in TLJ Daily E-Mail Alert No. 588, January 22, 2003; "Law Professor Submits Apocalyptic Declaration in RIAA v. Verizon" in TLJ Daily E-Mail Alert No. 596, February 3, 2003; "DOJ Files Brief in Support of RIAA in Verizon Subpoena Matter" in TLJ Daily E-Mail Alert No. 646, April 22, 2002; "District Court Rules That A DMCA § 512(h) Subpoena for the Identity of an P2P Infringer Does not Violate the Constitution" in TLJ Daily E-Mail Alert No. 649, April 25, 2003; and "Court of Appeals Denies Stay in RIAA v. Verizon" in TLJ Daily E-Mail Alert No. 674, June 5, 2003.

CATO Issues Paper on Internet Taxes and Tax Collusion

10/24. The Cato Institute releases a paper [40 pages in PDF] titled "The Internet Tax Solution: Tax Competition, Not Tax Collusion", by Adam Thierer and Veronique de Rugy. See also, executive summary.

The paper addresses the Internet Tax Freedom Act (ITFA), which was first passed in 1998, was extended in 2001, and is set to expire on November 1, 2003. The House has passed a bill to permanently extend it. The Senate has not -- yet.

The paper states that the ITFA "has been a remarkably misunderstood or misinterpreted statute and has very little to do with what really lies at the heart of this debate -- the effort by state and local governments to collect sales and use taxes on remote vendors in interstate commerce (mail order, catalog, and e-commerce companies). Contrary to press reports and statements made by some members of Congress, the ITFA moratorium does not directly affect the ability of states and localities to impose sales and use taxes on purchases made over the Internet."

"What state and local officials are really at war with is not the ITFA but 30 years of Supreme Court jurisprudence that has not come down in their favor", such as the Supreme Court's opinion in Quill v. North Dakota, 504 U.S. 298 (1992).

This case 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.

The paper argues that "Their ultimate goal is to overturn those precedents, which held that states could require only firms with a physical presence -- or ``nexus´´ -- in their jurisdictions to collect taxes on their behalf. State and local tax officials have worked to eliminate or water down these restrictions on their tax reach but thus far have not been able to get around them or convince Congress to authorize the imposition of collection obligations on interstate vendors."

The paper recommends that "It would be wrong for members of Congress to abdicate their responsibility to safeguard the national marketplace by giving the states carte blanche to tax interstate commercial activities through a tax compact. The guiding ethic of this debate must remain tax competition, not tax collusion."

People and Appointments

10/24. Clay Johnson, Deputy Director of Management, Office of Management and Budget, announced his intent to appoint Samuel Bodman as Chair of the E-Government Committee of the President's Management Council (PMC). Bodman is the Deputy Secretary of the Department of Commerce. See, OMB release [PDF].

10/24. The Securities and Exchange Commission (SEC) announced the reappointment of Charles Niemeier to the Public Company Accounting Oversight Board (PCAOB), for a five year term. See, SEC release.

10/24. The Senate confirmed Paul Atkins to be a member of the Securities and Exchange Commission (SEC) for a term expiring on June 5, 2008.

10/24. The Senate confirmed Ben Bernanke to be a be a member of the Board of Governors of the Federal Reserve System for a term of fourteen years from February 1, 2004. This is a renomination.

10/24. The Senate confirmed Roger Ferguson to be Vice Chairman of the Board of Governors of the Federal Reserve System for a term of four years. This is a renomination.

More News

10/24. President Bush gave a speech in Honolulu, Hawaii in which he addressed class action reform legislation pending in the Congress. He stated that "we need to cut down on the frivolous lawsuits which increase the cost of medicine. People who have been harmed by a bad doctor deserve their day in court. Yet the system should not simply reward lawyers who are fishing for rich settlements. Frivolous lawsuits drive up the cost of health care and they, therefore, affect the federal budget. Medical liability reform is a national issue that requires a national solution. The House of Representatives has passed a good bill to reform the system. The bill is now stuck in the United States Senate. The Senate must act on behalf of the American people. Senators must understand no one has ever been healed by a frivolous lawsuit." The House has passed the bill. The Senate failed to end a filibuster last week.

10/24. Attorney General John Ashcroft gave a speech to the International Association of Chiefs of Police (IACP) in Philadelphia, Pennsylvania in which he touched on some of the surveillance provisions of the USA PATRIOT Act. He stated that "Under the Patriot Act, we have been able to use the proven tactics and technologies used in the fight against organized crime and drug smugglers. With the common-sense reform of "roving wiretaps," we have been able to track the communications of those terrorists who switch phones to avoid detection. Under the Patriot Act, we can ask for important business records that might lead to important clues. And thanks to the Patriot Act, under a federal judge's supervision in critical cases, we can conduct an initial search of a terrorist organization without tipping off members of the operation."

DOJ Sues to Stop Merger of PIN Debit Networks

10/23. The Department of Justice (DOJ), seven states, and the District of Columbia filed a complaint [28 pages in PDF] in U.S. District Court (DC) against First Data Corporation and Concord EFS, Inc., alleging that First Data's planned acquisition of Concord would violate Section 7 of the Clayton Act.

Hewitt PateHewitt Pate, the Assistant Attorney General in charge of the Department of Justice's Antitrust Division, stated in a release that "If allowed to proceed, this merger of two of the three largest PIN debit networks will lead to higher prices to merchants, forcing them to pass on those price increases to many consumers throughout the United States in the form of higher prices for general merchandise ... In filing this lawsuit, the Department is seeking to preserve the benefits to American consumers of competition among PIN debit networks."

See, full story.

Representatives Write FCC Regarding Broadcast Flag Proceeding

10/23. Rep. Rick Boucher (D-VA), Rep. Richard Burr (R-NC), and Rep. Paul Gillmor (R-OH) wrote a letter to Michael Powell, Chairman of the Federal Communications Commission (FCC) regarding the FCC's broadcast flag rule making proceeding.

They wrote that the FCC "should establish objective technical criteria by which a technology may be added to Table A as a means of blocking retransmission of HDTV broadcast programs marked with the flag, as well as clear and transparent guidelines by which submissions will be judged by the Commission."

They also wrote that the FCC should not "create a situation in which consumers find themselves with legacy devices that must be replaced in order to receive or view content marked with the broadcast flag."

All three Representatives are members of the House Commerce Committee. Rep. Boucher and Rep. Gillmor are also members of the Subcommittee on Telecommunications and the Internet.

The FCC adopted its Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Copy Protection" on August 8, 2002. This is MB Docket No. 02-230.

The FCC stated in its report and order containing digital plug and play cable compatibility rules (announced on September 10, 2003) that the FCC "will address Digital Broadcast Copy Protection issues in the near future." See, stories titled "FCC Adopts Digital Plug and Play Cable Compatibility Rules" and "FCC States That It Will Act On Broadcast Flag" in TLJ Daily E-Mail Alert No. 737, September 11, 2003.

Bush States That Intellectual Property Is An Important Issue

10/23. President Bush and Australian Prime Minister John Howard held a press conference in Canberra, Australia at which Bush discussed the ongoing negotiation for a U.S. Australia free trade agreement (FTA).

Bush stated that "What I'm committed to is seeing that we can get this free trade agreement done by the end of December. That's what John and I talked about in Crawford. I think a free trade agreement with Australia would be good for America, good for American workers. I also believe that it would be good for Australia."

He added that "And the commitment we talked about was to make sure our negotiators push forward with a deal. Obviously, agriculture is an important issue, intellectual property is an important issue." See, Department of State transcript.

People and Appointments

James Loy10/23. President Bush announced his intent to nominate James Loy (at right) to be Deputy Secretary of Homeland Security. He is currently Administrator for the Transportation Security Administration (TSA). He was previously Under Secretary of Transportation for Security. Previously, he was Commandant of the Coast Guard and Coast Guard Chief of Staff. See, White House release.

10/23. President Bush nominated Neil Vincent Wake to be a Judge of the U.S. District Court for the District of Arizona. See, White House release.

10/23. John Kneuer was named Counselor to Acting Assistant Secretary Michael Gallagher, the head of the National Telecommunications and Information Administration (NTIA), effective October 27. Kneuer is currently an associate in the Washington DC office of  the law firm of Piper Rudnick. He previously worked as an attorney advisor in the Federal Communications Commission's (FCC) Wireless Telecommunications Bureau. See, NTIA release.

More News

10/23. The Department of Commerce's (DOC) Bureau of Industry and Standards (BIS), which is also known as the Bureau of Export Administration (BXA), published a notice in the Federal Register requesting public comment regarding its proposal to amend its rules to "expand the availability of license exceptions for exports and reexports of computer technology and software, and microprocessor technology on the Commerce Control List (CCL) of the Export Administration Regulations (EAR) under Export Classification Control Numbers (ECCNs) 3E002, 4D001 and 4E001. These ECCNs control technology and software that can be used for the development, production, or use of computers, and development and production of microprocessors." Comments are due by November 24, 2003. See, Federal Register, October 24, 2003, Vol. 68, No. 206, at Pages 60891-60895.

10/23. The Department of Commerce's National Telecommunications and Information Administration (NTIA) published a notice in the Federal Register requesting public comments regarding the adequacy of its preparation process for the International Telecommunications Union's (ITU) World Radiocommunication Conferences (WRC). The next WRC is in 2007. Comments are due by November 24, 2003. See, Federal Register, October 23, 2003, Vol. 68, No. 205, at Pages 60646-60648.

10/23. The U.S. Patent and Trademark Office (USPTO) announced that it is "temporarily postponing those provisions of the Trademark Rules of Practice that require electronic transmission to the USPTO of applications for international registration, responses to irregularity notices, and subsequent designations submitted pursuant to the Madrid
Protocol." It added that "The applicability date for regulations at 37 CFR 2.190(a), 2.198(a)(1), 7.7(a) and (b), 7.11(a) introductory text and (a)(9), 7.14(e), 7.21(b) introductory text and (b)(7) is suspended from November 2, 2003, to January 2, 2004." See, notice in the Federal Register, October 24, 2003, Vol. 68, No. 206, at Pages 60850-60851.

10/23. President Bush released a statement regarding the Senate's rejection of a motion to invoke cloture on S 1751, the "Class Action Fairness Act of 2003", by a vote of 59-39, on October 22, 2003. He stated that "Yesterday, thirty-nine Members of the U.S. Senate blocked an up or down vote on a bill that would reduce frivolous lawsuits and the burden they place on our economy. The Class Action Fairness Act would protect the legal rights of all citizens while ensuring that court awards and settlements go to those who are wrongfully injured rather than to a few wealthy trial lawyers. Class action reform will allow businesses and their employees to go back to the business of growing our economy and creating jobs. It was passed by the House and is favored by a large, bi-partisan majority in the Senate. Those who are serious about bringing an end to frivolous lawsuits in this Nation and protecting the rights of those who are wrongfully injured should strongly support this legislation. I am eager to sign it, our economy needs it, and I urge those Senators who stand in the way to let the will of the people be heard." See also, story titled "Senate Rejects Class Action Fairness Act" in TLJ Daily E-Mail Alert No. 764, October 23, 2003.

10/23. Secretary of Commerce Donald Evans announced that he will visit the People's Republic of China to discuss trade issues. The Department of Commerce (DOC) issued a release that states that the issues that he will discuss include "inadequate access to China’s markets; rampant piracy of intellectual property in China; forced transfer of technology from firms launching joint ventures in China; trade barriers; and capital markets that are largely insulated from free-market pressures". See, DOC release.

10/23. The Department of Commerce (DOC) and the Department of Education announced the formation of an entity titled the "Interagency Working Group on Advanced Technologies for Education and Training". The DOC and DOE stated that this group will "foster the development, application and deployment of advanced technologies in education and training in the United States". See, release.

Senate Rejects Class Action Fairness Act

10/22. The Senate rejected a motion to invoke cloture on S 1751, the "Class Action Fairness Act of 2003", by a vote of 59-39. See, Roll Call No. 403.

Senate Democrats lack the votes to defeat this bill on an ordinary majority vote. So, they have utilized a filibuster. Filibusters can be terminated by a cloture vote. However, cloture motions required a three fifths majority to pass. See, Senate Rule No. 22.

Sen. Charles GrassleyThis bill, sponsored by Sen. Charles Grassley (R-IA) (at right) and others, would reform class action procedure. The bill states that its purposes are "(1) assure fair and prompt recoveries for class members with legitimate claims; (2) restore the intent of the framers of the United States Constitution by providing for Federal court consideration of interstate cases of national importance under diversity jurisdiction; and (3) benefit society by encouraging innovation and lowering consumer prices."

The bill would amend 28 U.S.C. § 1332, regarding diversity jurisdiction, to provide that "The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which -- (A) any member of a class of plaintiffs is a citizen of a State different from any defendant; ..."

The bill would also increase court scrutiny of non-cash settlements. It provides that "The court may approve a proposed settlement under which the class members would receive noncash benefits or would otherwise be required to expend funds in order to obtain part or all of the proposed benefits only after a hearing to determine whether, and making a written finding that, the settlement is fair, reasonable, and adequate for class members."

It would also prevent geographic discrimination in payments to class members. It provides that "The court may not approve a proposed settlement that provides for the payment of greater sums to some class members than to others solely on the basis that the class members to whom the greater sums are to be paid are located in closer geographic proximity to the court."

The bill also would prohibit class counsel from paying bounties. Finally, the bill provides for clear written notices concerning a proposed settlements.

The vote broke down substantially along parties lines, with all but one Republican supporting the bill, and all but eight Democrats opposing the bill.

The eight Democrats who voted in favor of the cloture motion (and thus, in support of the bill) were Sen. Evan Bayh (D-IN), Sen. Thomas Carper (D-DE), Sen. Dianne Feinstein (D-CA), Sen. Herb Kohl (D-WI), Sen. Joe Lieberman (D-CT), Sen. Blanche Lincoln (D-AR), Sen. Zell Miller (D-GA), and Sen. Ben Nelson (D-NE).

Sen. James Jeffords (I-VT) voted yes. One Republican, Sen. Richard Shelby (R-AL), voted no.

Sen. John Kerry (D-MA) and Sen. John Edwards (D-NC), who are off running for President, and missing many votes, missed this vote too.

The House has already passed its version of the bill, and President Bush and Vice President Cheney have recently given speeches in which they have supported this legislation.

The Association of Trial Lawyers of America (ATLA) opposes the bill. The U.S. Chamber of Commerce supports the bill. Thomas Donohue, P/CEO of the Chamber, stated after the vote in a release that "This is a missed opportunity to get rid of an anchor dragging on our economic growth ... The current system of rampant venue shopping and abusive settlements costs every American $721 each and every year."

He added that "Based on the remarks made by a number of Senators after today's vote, however, we do remain encouraged about the prospects for the Senate passing class action reform this year. We intend to work quickly to try and address the concerns raised by a number of Senators on the floor after today's vote"

Senate Passes Burns Wyden Spam Bill

10/22. The Senate amended and passed S 877, the "Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003'", also known as the "CAN-SPAM Act of 2003", by a vote of 97-0. See, Roll Call No. 404. See, full story.

4th Circuit Rules in Cell Phone Products Liability Case

10/22. The U.S. Court of Appeals (4thCir) issued its unpublished opinion [5 pages in PDF] in Newman v. Motorola, a products liability case in which a cell phone user alleges that his Motorola phone gave him brain cancer. The Appeals Court affirmed the District Court's decision to exclude certain expert testimony offered by the plaintiffs.

Christopher Newman and his wife filed a complaint in U.S. District Court (DMd) against Motorola and others. The District Court ruled that an expert witness for the plaintiffs, Lennart Hardell, could not testify at trial for the purpose of expressing an expert opinion on the issue of causation. (See, opinion at 218 F. Supp. 2d 769.)

This appeal deals only with the issue of exclusion of this expert testimony. However, in resolving this issue, and applying Rule 702, Federal Rules of Evidence, the Appeals Court examined, and commented upon the one expert's research in support for the proposition that cell phones cause brain cancer. It found it lacking.

Rule 702 provides that "If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case."

The Court wrote that "Federal Rule of Evidence 702 requires a trial judge to perform a gatekeeping function with respect to expert testimony; for such testimony to be admissible, the judge must determine that it is both reliable and relevant." It added that "In the end, the trial judge has ``considerable leeway´´ in making the admissibility determination."

The Court wrote: "The district court identified several problems with Dr. Hardell’s proffered testimony on causation, and we mention two. Most significantly, the district court observed that Dr. Hardell’s research fails to show that users of cellular phones face an increased risk for developing malignant brain tumors. Although Dr. Hardell testified that his research shows an increased risk for developing brain tumors generally, he achieved this result only by considering the occurrence of a particular subtype of benign tumors, specifically, benign acoustic neurinomas. The district court questioned the relevance of research linking the use of cellular phones to the development of acoustic neurinomas because Dr. Newman does not have an acoustic neurinoma; he has a malignant astrocytoma."

The Court continued: "The district court also questioned the reliability of Dr. Hardell’s research because it failed to demonstrate a dose-response relationship, that is, it failed to show that with greater use of cellular phones, a person faced a greater risk of developing a tumor. Showing a dose-response relationship is, as Dr. Hardell agreed, an important factor in establishing causation. In short, Dr. Hardell’s testimony faced problems of both relevance and reliability, as the district court determined."

Hence, the Appeals Court concluded that the District Court did not abuse its discretion, and affirmed.

This opinion is short, but not insignificant. The Court did not state why it designated it as unpublished. It did write, however, that "Unpublished opinions are not binding precedent in this circuit. See Local Rule 36(c)."

This case is Christopher Newman and Frances Newman v. Motorola, et al., U.S. Court of Appeals for the Fourth Circuit, No. 02-2424, an appeal from the U.S. District Court for the District of Maryland, at Baltimore, Judge Catherine Blake presiding, D.C. No. CA-00-2609-CCB.

Zoellick Discusses Intellectual Property and 3G Issues in China

10/22. U.S. Trade Representative (USTR) Robert Zoellick held a press conference in Beijing, China in which he discussed trade related intellectual property and communications issues. See, transcript [9 pages in PDF].

Robert ZoellickCounterfeiting. Zoellick (at right) first addressed counterfeiting in the People's Republic of China. He stated that "Counterfeiting is one of the topics I discussed both with Executive Vice Minister Yu when I was in Bangkok, and I also talked about it with the vice premier, and I was pleased to learn that she has assumed responsibility for an overall effort in China dealing with both intellectual property rights and counterfeiting. One of the points that I emphasized, because I received a very useful report on this from a special trade advisory commission we have in the United States, is the effect of counterfeiting on health and safety in China. For example, pharmaceuticals that are counterfeit, first may not provide the benefits, but second could actually be dangerous for people. Or, the question of shatterproof glass -- we've learned that there were problems in terms of autos that are supposed to have shatterproof glass, and indeed the glass isn't shatterproof."

He also stated that "One of the other insights that I tried to provide was that when I was at the APEC [Asia Pacific Economic Cooperation] meeting I also met with John Tsang, who's the new Commerce Secretary in Hong Kong, who used to be the customs commissioner. As you may know, in the general intellectual property area, Hong Kong has really provided a useful model about how to try to improve some of the intellectual property issues, still discussing some of the counterfeit topics. So, frankly I mentioned this is something that Beijing, the United States but also Hong Kong may be able to learn some lessons on how progress can be made based on the Hong Kong experience."

Intellectual Property Piracy. Zoellick also discussed piracy. He said that "you have piracy all around the world. So it's no surprise that people would try to take advantage of this. What we focused on, and I think, at least I've received receptivity on this, is that if China wants to develop knowledge industries, it has its own interest in protecting intellectual property. The ambassador is having a conference here on November 18th, which I think is an excellent idea, where you're bringing together Chinese and American CEOs and senior executives in the knowledge industries, and talk about the importance of protection, whether it be software or movies or videos or others. We've encouraged some of the Chinese government authorities to take part in that because, again, I think that in many areas there are win-win possibilities. In many respects the U.S. and Chinese economies have a high degree of complementarity, but we also need to have fairness in areas where the United States has a comparative advantage."

He continued that "really there's a combination of things: one, you have to be able to have good laws on the books; second, you need to have the investigatory power and not just eight hours a day because the shops will work at other times; and third you need some prosecutions and put some people away. If it just becomes a fine or a cost of doing business, then you're not going to be able to stop the intellectual property piracy. So the message is really twofold: one, it's in a mutual interest, and second, if you want us to keep our markets open, you have to be able to help us protect some of the product that we develop and sell."

He also stated that "In about a month, Ambassador Shiner will be returning for both an intellectual property rights dialogue that we've been pursuing, but also an additional trade dialogue with Vice-Minister Ma."

Third Generation Wireless. Finally, Zoellick discussed third generation (3G) wireless services. He said that "We talked about the critical question of technology neutrality. For example, as people develop 3-G [third generation] wireless business. Our view has been different than the European view, is rather than have one standard, allow standards to be able to compete. So, that's one form of technology. Another point obviously relates to the broader question of service industries, and those are topics that, in addition to the discussions we've had here, I believe will have some follow-up within the next three or four weeks in November."

He also said that "This is obviously an issue that Qualcomm and others have raised with us. I believe I mentioned with Executive Vice-Minister Yu the broader question, for example, on fairness related to telecom obligations. There's been some discussion in China about moving some of the services from the value-added category to basic telecom. These were services that were value-added at the time of WTO accession, and if they're moved to basic telecom, you have to have a higher capitalization requirement. That's the sort of question that raises a sense of fairness here.

And, he added, "Now there are other telecommunications issues that some of my colleagues have gotten into, and will get into in our further discussions related to the megahertz spectrum; there's another question about 450 megahertz spectrum, whether it's available for rural subscribers and others, and there's an interest here of Chinese suppliers being involved with that too."

Incenting Innovation: Medals, Funding, and Property Rights

10/22. The Department of Commerce (DOC) announced that it has picked the winners of its annual National Medals of Science and Technology. See, DOC release for the list of winners.

The White House press office also issued a release that states that "The National Medal of Technology recognizes men and women who embody the spirit of American innovation and have advanced the nation's global competitiveness. Their groundbreaking contributions commercialize technologies, create jobs, improve productivity and stimulate the nation's growth and development. This award, established by Congress in 1980, is administered by the Department of Commerce."

This release also states that "The National Medal of Science honors individuals in a variety of fields for pioneering scientific research that has led to a better understanding of the world around us, as well as to the innovations and technologies that give the United States its global economic edge."

President Bush will award medals to the winners at a White House ceremony on November 6.

These sorts of awards are one of the things that governments do to incent innovation and pick winning technologies. Another approach is for the government to pick certain technologies that it determines ought to be developed, and provide funding to the entities that its picks to research and develop those technologies. Yet a third approach is to establish and maintain a government mechanism that gives limited property rights to all innovators, and leaves it to investors in the market to decide what to fund, and to consumers in the market to pick winning technologies.

The Constitution provides for this third approach. It states that "The Congress shall have the power ... To Promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive right to their respective Writings and Discoveries." It also provides that "No Title of Nobility shall be granted by the United States."

The federal government is now involved in all three approaches listed above.

Meanwhile, some members of Congress are focusing on the property rights regime. Members of the Congressional Caucus on Intellectual Property have written a letter to House Republican and Democratic leaders asking that a vote be scheduled on HR 1561, the "United States Patent and Trademark Fee Modernization Act of 2003 ".(The letter was written on October 15, and then circulated for more signatures.)

They wrote that "A well-functioning USPTO has been vital to the United States' commercial and scientific base by providing an economic engine and preserving the incentives for innovation as guaranteed under the U.S. Constitution. For more than two hundred years, the agency has helped secure the economic success of the United States by empowering inventors, such as Thomas Edison and the Wright Brothers ..."

The letter continues that the USPTO "is severely in need of additional resources and thus is in a true crisis." The problem derives from the situation that the USPTO is funded by user fees, but some of these fees are diverted to subsidize other government programs, leaving the USPTO underfunded.

President Bush, like President Clinton before him, has continued to submit budgets to the Congress that divert user fees. Moreover, the Congress has for over a decade passed appropriations bills that continue this diversion. The appropriations bill for the Departments of Commerce, Justice, and State (CJS bill) for fiscal year 2004 that the House passed in July, and the CJS bill that the Senate Appropriations Committee passed in September, continue the diversion.

HR 1561 would change this. It would allow the USPTO to spend on its operations all of the user fees that it collects. The IP Caucus letter warns that if this bill is not passed, "patent pendency will increase dramatically", "pendency would jump to over 40 months in 2008" and "patent holders would be unable to rely on the quality of their patents and will risk expensive and lengthy litigation".

When Phil Bond, the Under Secretary for the Technology Administration (TA), and other Commerce Department officials held a briefing in February on the Administration's FY 2004 budget proposal, Bond stated that there was a total of $123 Billion for research and development. The USPTO budget is about one one-hundredth as large. The President's budget proposal included $1.4 Billion for the USPTO. HR 2799, the House CJS bill, provides for "$1,138,700,000" plus "an additional amount not to exceed $100,000,000 from fees collected in prior fiscal years" for the USPTO.

People and Appointments

10/22. William Davenport was named Deputy Division Chief of the Federal Communications Commission's Enforcement Bureau's Investigations and Hearings Division. Hillary De Nigro, Trent Harkrader, and Dana Leavitt were named Assistant Division Chiefs. See, FCC release [PDF].

10/22. The Senate confirmed Thomas Hardiman to be a Judge of the U.S. District Court for the Western District of Pennsylvania.

More News

10/22. Sen. Susan Collins (R-ME), Sen. Joe Lieberman (D-CT), and Sen. Carl Levin (D-MI) sent a letter to Secretary of Defense Donald Rumsfeld regarding JetBlue's disclosure of customer information. They wrote that "We are writing to seek further information regarding why a Department of Defense contractor collected the personal information of more than one million passengers of a commercial airline, JetBlue Airways, and then matched that information against commercial databases to develop passenger profiles. These actions suggest the contractor may have violated the Privacy Act of 1974, and they raise disturbing questions about the reliability of safeguards in place at the Defense Department to protect Americans' privacy." See, also story titled "EPIC Submits Privacy Complaint To FTC Regarding JetBlue", also published in TLJ Daily E-Mail Alert No. 744, September 23, 2003.

10/22. The Federal Communications Commission (FCC) announced that on October 20, 2003 it adopted a Notice of Apparent Liability for Forfeiture (NALF) that fines four radio and TV stations for violation of the FCC's rules regarding radiofrequency radiation limits. This NALF is FCC 03-258. The FCC stated that this proceeding involves "a multi-user site where the power density level produced by each individual licensee was within acceptable limits, but the cumulative effect exceeded the limits established by the FCC." The FCC imposed a fine (proposed forefeiture) of $10,000 for each station. See, FCC release [PDF].

7th Circuit Interprets Section 230 Immunity and ECPA

10/21. The U.S. Court of Appeals (7thCir) issued its opinion [12 pages in PDF] in Doe v. GTE, a case involving Section 230 interactive computer services immunity. The District Court dismissed the complaint against a pair of interactive computer service providers (or ISPs) who had merely provided web hosting services to smut merchants who had surreptitiously videotaped the plaintiffs, and then sold the videotapes through their web sites. The Appeals Court affirmed. The Court also held that the ISPs are not liable under the Electronic Communications Privacy Act (ECPA) when their users sell videotapes that were made in violation of the ECPA.

The plaintiffs (below) and appellants (on appeal) are the college athletes who were secretly videotaped in their locker rooms. The videotapes were then sold by web based businesses, who obtained web hosting services from several companies, including GTE and Genuity. (Both are now subsidiaries of Verizon.)

The athletes filed a John Doe complaint, which was removed to the U.S. District Court (NDIll), against the smut merchants, their web site hosting companies, and the universities where the videotaping took place. They alleged violation of 42 U.S.C. § 1983 and the Electronic Communications Privacy Act (ECPA), 18 U.S.C. § 2511.

The universities prevailed on qualified immunity. The smut merchants (one of whom was named Franco) either defaulted -- the athletes have $500 Million in uncollectible judgments -- or could not be served. Several web hosting companies went bankrupt. This left only two defendants, GTE and Genuity. The District Court then dismissed the complaint against these defendants on the grounds that they have immunity, as interactive computers services, under 47 U.S.C. § 230. This appeal followed.

Section 230(c)(1) provides that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."

The Appeals Court, with Judge Frank Easterbrook writing the opinion, affirmed. This outcome is consistent all other circuit court opinions. See, Zeran v. AOL, 129 F.3d 327 (4th Cir. 1997); Ben Ezra, Weinstein & Co. v. AOL, 206 F.3d 980 (10th Cir. 2000); Green v. AOL, 318 F.3d 465 (3d Cir. 2003); Batzel v. Smith, 333 F.3d 1018 (9th Cir. 2003); and Carafano v. (9th Cir. 2003). In addition, the District Court in the District of Columbia reached the same conclusion in Blumenthal v. AOL and Drudge (1998).

Nevertheless, the athlete appellants tried to argue their way around Section 230 and this body of precedent.

They argued that GTE and Genuity are liable under the ECPA, and cited Section 230(e), which provides that the ECPA is not limited by Section 230. The Court concluded that Franco and the other smut merchants had intercepted oral communications, because the video tapes also included audio. However, the Court continued that neither GTE nor Genuity had intercepted anything, and that the ECPA does not create secondary liability.

The plaintiffs also argued for a tortured construction of the statute, and that GTE and Genuity are liable for negligent entrustment of facilities. The Appeals Court rejected these arguments.

However, the Appeals Court left open a possible argument for future cases. It wrote that "Maybe plaintiffs would have a better argument that, by its contracts with Franco, GTE assumed a duty to protect them. No third-party-beneficiary argument has been advanced in this court, however, so we need not decide how it would fare."

This case is John Doe, et al. v. GTE Corporation and Genuity, Inc., U.S. Court of Appeals for the 7th Circuit, No. 02-4323, an appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 99 C 7885, Judge Charles Kocoras presiding.

See also, TLJ story titled "9th Circuit Applies Section 230 Immunity to Online Dating Service", August 13, 2003, regarding the Carafano case, and story titled "9th Circuit Construes Section 230 Immunity in Suit Against Listserv Operator" in TLJ Daily E-Mail Alert No. 687, June 25, 2003, regarding the Batzel case.

Senate Committee Holds Hearing on PATRIOT Act

10/21. The Senate Judiciary Committee held a hearing titled "Protecting Our National Security from Terrorist Attacks: A Review of Criminal Terrorism Investigations and Prosecutions". Attorney General John Ashcroft did not appear, but sent one Assistant Attorney General, and two U.S. Attorneys, in his place.

Several of the Democrats on the Committee offered harsh criticism of the Attorney General and the Department of Justice (DOJ). Although, much of their criticism focused on matters unrelated to the PATRIOT Act, such as gun control, CIA leaks, and the Washington DC snipers.

Sen. Patrick Leahy (D-VT), the ranking Democrat on the Committee, wrote in his opening statement that "I expect the Attorney General to participate in these hearings, and I am disappointed that we will not be hearing from him today. Unlike other senior Administration officials who regularly participate in oversight hearings, Attorney General Ashcroft has appeared before this Committee only once this year, and then only for a short time."

He also criticized Ashcroft at length for his "dismissive attitude" about, and attempts to marginalize, critics of the DOJ. He said that this is "beneath the dignity of the Department of Justice".

Sen. Ted Kennedy (D-MA) stated that "only the Attorney General can supply adequate answers to our questions". Kennedy criticized the Attorney General for "barnstorming the country", and waging a "public relations" campaign, rather than meeting with Senators.

Sen. Joe Biden (D-DE) stated that the government has "done a pretty good job", citing the breakup of terror cells. And, he reiterated his support for the PATRIOT Act. But, he continued, that he is troubled by the DOJ's "lack of candor". He said that "the Department operates in a shroud of secrecy". He warned the DOJ officials present at the hearing that "the Act will be repealed unless you guys get your act together." He called the Attorney General's absence from the hearing "outrageous".

Republican members of the Committee did not criticize the Attorney General or the DOJ. Sen. Orrin Hatch (R-UT), the Chairman of the Committee, stated in his opening statement that the "inquiry will attempt to cut through the rhetoric, confusion, and distortion to get to the facts necessary to find out if we are protecting our citizens’ lives and their liberties."

He stated that the next hearing on this issue is tentatively set for November 5, and that the Committee may hold field hearings on this issue during the next recess.

Sen. John Cornyn (R-TX) said "I worry about hysterical claims about civil liberties violations." He said that they undermine legitimate claims.

Internet Surveillance. Christopher Wray, Assistant Attorney General in charge of the Criminal Division, testified at the hearing regarding several of the provisions of the PATRIOT Act that have been criticized.

Wray wrote that "The Patriot Act also brought the law up to date with current technology, so we no longer have to fight a digital-age battle with antique weapons. Terrorists, like drug dealers and other organized criminals, have employed modern technology to conduct and conceal their activities. They are now trained to thwart surveillance by rapidly changing cell phones. The Patriot Act simply leveled the playing field by allowing terrorism investigators to adapt to these methods. Section 216 clarified that the authority to use pen registers and trap-and-trace devices -- long used for performing surveillance on phones -- may be sought from a court for Internet communications.

Sneak and Peak Warrants. Wray also addressed sneak and peak warrants. He wrote that "Another important tool has been the court-approved delayed notice search warrant. This warrant allows investigators, with court approval, to delay notifying the target of a search for a limited time while the warrant is executed. Authority to delay notice can be used only upon the issuance of a court order in narrow circumstances, such as when delay is necessary to protect witnesses and cooperators, to avoid the disclosure of undercover operations, or to prevent the removal or destruction of evidence. This is a valuable tool, the use of which has long been upheld by courts nationwide in investigations of organized crime, drug offenses, and child pornography. The Patriot Act simply codified the case law in this area to provide certainty and nationwide consistency in terrorism and other criminal investigations."

Sneak and peak warrants are addressed in Section 213 of the PATRIOT Act. The Act does not sunset this provision. However, Sen. Leahy, Sen. Craig, and Sen. Feingold, all members of the Judiciary Committee, have each sponsored bills that would sunset this provision. Also, the Otter amendment in the House would bar use of federal funds to implement Section 213.

Sen. Feinstein defended this Section of the PATRIOT Act. She said that it is merely a codification of case law, and that "it was actually narrower than the authority that existed before" passage of the PATRIOT Act.

Roving Wiretaps. Wray also wrote in his prepared testimony that "``Roving´´ wiretaps, when approved by a court, allow investigators to conduct electronic surveillance on a particular suspect, rather than a particular telephone. This technique has been used for over a decade to investigate ordinary crimes, including drug offenses and racketeering; thanks to the Patriot Act, terrorism investigators now have the same valuable tool."

See also, prepared testimony of Patrick Fitzgerald, the U.S. Attorney for the Northern District of Illinois, and prepared testimony of Paul McNulty, the U.S. Attorney for the Eastern District of Virginia.

Legislators Announce Formation of International Anti-Piracy Caucus

10/21. Rep. Bob Goodlatte (R-VA), Rep. Adam Schiff (D-CA), Rep. Shelley Berkley (D-NV), Sen. Joe Biden (D-DE) and Sen. Gordon Smith (R-OR), held a press conference to announce the formation of the Congressional International Anti-Piracy Caucus. They will also released a "2003 International Piracy Watch List".

The caucus members stated that they will brief Congressional delegations traveling to countries with significant piracy problems, and raise piracy problems in their own discussions with foreign government officials and legislators. They will also work with the relevant executive branch agencies, including the Office of the U.S. Trade Representative (USTR) and Department of State. They will also hold staff and member briefings and forums on international intellectual property protection and piracy. They will also work with the committees of jurisdiction in the House and Senate on related hearings and legislation.

Rep. Bob GoodlatteRep. Goodlatte (at right) explained that the Caucus' "2003 International Piracy Watch List" is an effort to call attention to countries where piracy has reached alarming levels. The 2003 list is comprised of Brazil, the People's Republic of China, Pakistan, Russia, and Taiwan.

The USTR also maintains a "Watch List" and a "Priority Watch List". See, USTR's Special 301 2003 Report.

Sen. Biden, the ranking Democrat on the Senate Foreign Relations Committee, stated that "intellectual property represents the single largest sector of the American economy" and that intellectual property piracy "has resulted in the loss of 100,000 American jobs". He said "This is a crime -- this is flat out theft."

Sen. Biden said that he wants the Bush administration to piracy "put higher on their agenda" when it is negotiating free trade agreements.

Sen. Smith applied the Ten Commandments to intellectual property piracy: "Thou shalt not steal." He also stated that he will insist that the Office of the USTR negotiate free trade agreements that address both substantive law, and enhanced enforcement.

James Mendenhall of the Office of the USTR was present in the audience at this event. He stated that "I can assure you that it is a very high priority." He added that he looks forward to working with the members of this caucus in the future.

In addition to the Representatives and Senators, several representatives of groups spoke at the event, including Fritz Attaway (Motion Picture Association of America), Mitch Bainwol (Recording Industry Association of America), Robert Holleyman (Business Software Alliance), and Douglas Lowenstein (Entertainment Software Association).

House Subcommittee Holds Hearing on Splitting Ninth Circuit

10/21. The House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property (CIIP) held a hearing on HR 2723, the Ninth Circuit Court of Appeals Judgeship and Reorganization Act of 2003. This bill would split the U.S. Court of Appeals for the Ninth Circuit into two circuits, with California, Nevada and Arizona remaining in a new Ninth Circuit, and Washington, Oregon, Idaho, Montana, Alaska and Hawaii forming a new 12th Circuit.

The Ninth Circuit has by far the largest number of Appeals Court judges. It currently has 28 authorized active judges. The Judicial Conference has proposed adding 7 more. Also, there are usually about 15 to 20 senior judges who sit on panels.

Arthur Hellman, a professor at the University of Pittsburgh Law School, wrote in his prepared testimony [49 pages in PDF] that "the court will be a court of 50 or more judges. I believe that there is a real question whether the judges on a court of that size will be able to know one another as members of a court should do."

He also noted that for the last ten years "the Ninth Circuit Court of Appeals has consistently ranked at or near the bottom among federal appellate courts in the median time interval from filing the notice of appeal to final disposition."

Proposals to split the Circuit have been advanced for some time. At this hearing, a group of Ninth Circuit Judges offered a relatively new argument for keeping one huge circuit intact -- computers.

For example, Judge Alex Kozinski wrote in his prepared testimony in opposition to HR 2723 that "The advances in technology in the past quarter century have transformed the world, and that world includes the court system. The Ninth Circuit was the first circuit to institute an automated docketing system; we are now on the verge of an electronic web-based filing system. The use of instantaneous electronic mail has allowed circuit judges over wide geographic distances to communicate as if they were in the same courthouse. Videoconferencing for motion panels, and administrative meetings has become common place."

He added that "the court's ability to manage its caseload, and to track novel and potential precedential though the use of computer programs has allowed this court to function more efficiently today than it ever has. I believe that HR 2723 would impede much of the progress we have made in managing a large appellate court."

Similarly, Chief Judge Mary Schroeder wrote in her prepared testimony that "Due to the advances in technology, such as the automated docket, computer aided legal research, instantaneous electronic mail, videoconferencing, along with the economies of scale that can be achieved in a large circuit, we have increased our efficiency and our caseload has become more, and not less, manageable."

Rep. Otter Introduces Bill to Amend PATRIOT Act

10/21. Rep. Butch Otter (R-ID) introduced HR 3352, the "Security and Freedom Ensured Act of 2003 (SAFE) Act". This bill is similar, but not identical, to S 1709, also titled the SAFE Act, introduced in the Senate on October 2 by Sen. Larry Craig (R-ID).

HR 3352 would modify several sections of the criminal code and the Foreign Intelligence Surveillance Act (FISA) to revise changes made by the USA PATRIOT Act. The "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001" was passed by the 107th Congress as HR 3162. It became Public Law 107-56 on October 26, 2001.

The bill would amend Section 501 of the FISA. This is the section of the FISA that provides for "Access to Certain Business Records for Foreign Intelligence and International Terrorism Investigations".

The bill would also amend 18 U.S.C. § 3103a to limit the authority to delay notice of search warrants, also known as "sneak and peak" warrants.

See also, story titled "Senators Craig and Dubin Introduce Bill to Modify PATRIOT Act " in TLJ Daily E-Mail Alert No. 753, October 6, 2003.

The original cosponsors of HR 3352 are Rep. Mike Simpson (R-ID), Rep. John Conyers (D-MI), Rep. Bernie Sanders (I-VT), Rep. Dennis Kucinich (D-OH), Rep. Ron Paul (R-TX), Rep. Barney Frank (D-MA), Rep. Tom Udall (D-NM), Rep. Gregory Meeks (D-NY), and Rep. Jeff Flake (R-AZ).

5th Circuit Affirms in Southwestern Bell v. PUC Texas

10/21. The U.S. Court of Appeals (5thCir) issued its opinion [11 pages in PDF] in Southwestern Bell v. PUC of Texas, affirming the District Court.

The Public Utility Commission of Texas (PUC) determined in an arbitration proceeding that AT&T, and not Southwestern Bell, was responsible for paying the increased interconnection costs resulting from Southwestern Bell having to carry traffic outside a particular calling area to a distant point of interconnection (POI) selected by AT&T.

AT&T filed a complaint in U.S. District Court (WDTex) seeking judicial review of this determination. The District Court granted summary judgment to AT&T, reversing the PUC order, and remanding. This appeal followed. The Appeals Court affirmed.

This case is Southwestern Bell Telephone Co. v. Public Utilities Commission of Texas, et al., U.S. Court of Appeals for the Fifth Circuit, No. 03-50107, an appeal from the U.S. District Court for the Western District of Texas.

More News

10/21. The World Trade Organization (WTO) announced that Hong Kong, China will host the Sixth WTO Ministerial Conference. However, the WTO did not set a date. See, WTO release.

11/21. The Department of Commerce's Bureau of Industry and Security (BIS) announced that November 21 is the deadline to submit comments to it regarding its foreign policy-based export controls. This category includes high performance computers, encryption items, as well as chemical and biological agents, missiles, and "implements of torture". The BIS is reviewing these controls in the Export Administration Regulations to determine whether they should be modified, rescinded or extended. See, notice in the Federal Register, October 21, 2003, Vol. 68, No. 203, at Pages 60050-60052.

10/21. Jason Klitenic was named Deputy General Counsel for the Department of Homeland Security. He has been Deputy Associate Attorney General at the Department of Justice since January 2002. Before that, he was a partner in the law firm of Alston & Bird in Atlanta, Georgia.

10/21. Andrew Snowdon was named Oversight and Investigations Counsel for the House Commerce Committee. He was previously an Associate Director for the National Association of Securities Dealers' (NASD) Department of Market Regulation. And before that, he worked at the Securities & Exchange Commission (SEC) as a senior counsel in the Division of Enforcement.

10/21. Rep. Bill Shuster (R-PA) introduced HR 3368, a bill to establish "a pilot grant program for the purpose of awarding grants to eligible vocational and career technology schools for retraining displaced workers in high technology fields". It would authorize the appropriation of $50 Million for fiscal year 2005. It would only apply to the state of Pennsylvania. It was referred to the House Committee on Education and the Workforce. See also, Shuster release.

Go to News from October 16-20, 2003.